Arizona supply chain analysis

              Arizona Supply Chain Analysis October 2005







PREPARED FOR:







ARIZONA DEPARTMENT OF COMMERCE OFFICE OF ECONOMIC INFORMATION AND RESEARCH 1700 W. WASHINGTON, SUITE 600 PHOENIX, AZ 85007







PREPARED BY:







APPLIED ECONOMICS 4648 E. SHEA BOULEVARD, SUITE A-260 PHOENIX, AZ 85028 CHABIN CONCEPTS 2889 COHASSET ROAD, SUITE 5 CHICO, CA 95973







Table of Contents



Executive Summary .............................................................................................................................. 1.0 2.0 Introduction ................................................................................................................................ Secondary Data Analysis ............................................................................................................ Identification of Suppliers by Industry............................................................................... Representation of Industries of Opportunity in Arizona .................................................... Arizona Supplier Gaps ....................................................................................................... County Level Commodity Production ............................................................................... 3.0 Survey Sample Selection and Design .......................................................................................... Identification of Survey Participants.................................................................................. Survey Design .................................................................................................................... Survey Launch and Promotion........................................................................................... 4.0 Survey Results ............................................................................................................................ Respondent Profile ............................................................................................................. Purchasing Decisions ......................................................................................................... Location of Purchases ........................................................................................................ Types of Purchases............................................................................................................. Other Issues and Comments............................................................................................... Comparison of Survey Results to Secondary Data ............................................................ 5.0 Models to Connect Buyers and Suppliers ................................................................................... AZBusinessLinc................................................................................................................. Connectory ......................................................................................................................... FOCUS............................................................................................................................... APPENDICES ...................................................................................................................................... Appendix A ? National Suppliers............................................................................................. Appendix B ? Arizona Share of Employment and Output ....................................................... Appendix C ? Arizona Supplier Gaps ...................................................................................... Appendix D ? Commodity Production by County ................................................................... Appendix E ? On-Line Survey ................................................................................................. Appendix F ? Personal Interview Script................................................................................... i 1 3 3 4 5 13 16 16 17 17 18 18 20 23 24 27 28 30 30 32 33 34 34 47 56 70 75 86







i







ii







Executive Summary



The purpose of this analysis is to identify supplier gaps in Arizona based on secondary data as well as a statewide buyer survey. The buyer survey includes results from a web-based questionnaire, as well as personal interviews. The analysis is structured around twelve industries of opportunity identified in "Arizona's Economic Future," prepared by Economy.com in August 2002. The following summarizes the findings from both the secondary data analysis and the buyer survey.







Supplier Gaps



? Electronic components, steel and other primary metals and specialized scientific supplies were noted as supplier gaps in both the survey and the secondary data analysis. Electronic components are important in software, telecommunications, high tech instruments, aerospace, other high tech and industrial machinery manufacturing, according to the secondary data. Steel and primary metals are important for industrial machinery, and scientific supplies are important for high tech instruments. Other gaps noted in the survey that were not apparent from the secondary data included window hardware, solenoids, locks, die casting magnets, office furniture, computers, power panels, batteries, chemicals and gases and optic lasers. Most of these items (with the exception of office furniture and computers) represent highly specialized products that may only be produced by a limited number of companies throughout the country. Alternatively, professional services were noted as a gap for many industries in the secondary data analysis, but not in the survey results. It is generally the case that companies are buying more basic goods locally. These include office supplies and printing; local services such as security, building maintenance and food service; standard manufactured products and hardware (particularly fabricated metal products) and professional and business services. The types of products being purchased outside Arizona are typically more specialized. In general, the demand from a particular industry group may not be large compared to total commodity production, but when added to demand from all other industries in Arizona there is a deficit. It is not clear from the secondary data whether that deficit is causing a problem for the industries of opportunity. However, it would appear from this analysis that Arizona is a net importer of many manufactured goods that are used by the industries of opportunity.







?







?







?







Other Purchasing Issues



In addition to identifying specific supplier gaps, the buyer survey included a variety of questions about purchasing methods and issues in identifying suppliers. ? For the companies that responded to the survey, almost all indicated that most purchasing for their Arizona operations is done at a centralized facility located within the state. This is significant because it makes it easier for ADOC or local economic development organizations to develop relationships with local buyers. Companies use a wide variety of methods to identify suppliers and potential suppliers. The most common was internet search, followed by firm records and previous contacts and







?







i







experience of the buyer. Often the methods used depend on the commodity or service being purchased and/or contract requirements. ? Survey respondents were asked to rank a number of factors by level of importance that they use when choosing suppliers. Quality of the product was by far the most important to buyers with 96 percent of buyers ranking quality as most important or very important. Reliability of delivery was ranked most important or very important by 89 percent of buyers. Other key factors included price and service/maintenance. About half of the survey respondents purchase less than 25 percent of their supplies outside Arizona. However, another 25 percent purchase at least half of their supplies outside the state. Seventy-four percent of the companies responding to the survey indicated they have no "buy local" policy in place. It is difficult to say whether non-local purchases are occurring because products are not available in Arizona, or whether local suppliers are unable to meet other specific criteria. However, the primary reason the products and services that could be purchased in Arizona are not according to survey respondents is that companies cannot locate local suppliers. In addition to reasons for not purchasing locally, buyers were asked what it would take for them to buy more supplies in Arizona. Availability appeared to be the biggest issue, particularly for specialized supplies and components and particularly outside of the metro areas. However, price was ranked only slightly below availability.







?







?







?







Review of Programs to Connect Buyers and Suppliers



One of the ways that buyer supplier relationships in Arizona could be strengthened is through a statewide program that would provide resources to allow buyers and local suppliers to identify each other more easily to and provide better feedback to suppliers enabling them to compete more effectively with nonlocal vendors. This study includes reviews of three such programs: AZBusinessLinc used in Tucson; Connectory which is a similar program used in California; and FOCUS which is used for government procurement in California. ? AZBusinessLinc is an on-line supplier database owned by the City of Tucson that allows companies to enter a detailed profile that can be searched by potential buyers. The program is currently marketed to buyers through the efforts of a five person staff who meet regularly with large local companies to discuss current and anticipated procurement needs. The most appealing features of the database to these companies are speed and level of detail of the supplier selection criteria. The access to staff people from the City of Tucson who will do much of the leg work in identifying potential suppliers free of charge is also very important. The database is marketed to sellers exclusively through strategic partnerships with other cities, cluster organizations and chambers in the five-county Southern Arizona region. Connectory.com is a business-to-business, buyer-supplier marketing and communication tool that covers the State of California. It provides a regional source for products, technologies, services, company capabilities, capacities and expertise. In addition to an on-line supplier directory, the Connectory web site also includes a bulletin board that has "want ads" for buyers and suppliers, listings of international trade opportunities, employment opportunities, venture funding opportunities, success stories and upcoming events. Connectory is funded through a







?







ii







variety of public and private sources including sponsorships and sales of banner ads on the web site. ? FOCUS is California's only nationwide, local government-to-government purchasing program. It allows cities, counties, schools, special districts and other public entities to acquire technology products and services quickly and at competitive rates. The program does require vendors to pre-certify; however once they are part of the program they are able to circumvent future bidding processes. FOCUS gives local government access to pre-screened, competitively bid vendors in the technology industry, avoiding the expense and delay of a protracted government RFP process.







Summary



While there are clearly existing supplier gaps for some types of specialized commodities, it may not be feasible to expect that all these needs can be met locally. The key to increasing the volume of local transactions for products that are available locally and making Arizona suppliers more competitive appears to be increased communication between buyers and suppliers about specific buyer requirements, and better methods for identifying local suppliers that are able to meet those requirements.







iii







1.0 Introduction



The purpose of this analysis is to identify Arizona supplier gaps based on secondary data as well as a statewide buyer survey. The analysis is structured around twelve industries of opportunity identified in "Arizona's Economic Future," prepared by Economy.com in August 2002. The industries of opportunities listed below were selected based on three criteria: (1) national industry growth projections; (2) estimated relationships between historical regional industry growth and Arizona's comparative advantages; (3) industries with qualities that would make them competitive in the changing international economy including technology based, highly productive, research intensive, linked to export markets, and consistent with local resources and Arizona's diverse regional economies. The resulting opportunity industries for Arizona include the following: ? ? ? ? ? ? ? ? ? ? ? ? software and systems integration health care and biotech industrial machinery telecommunications high tech instruments forest products engineering research transportation and logistics agriculture, food processing and ag technology aerospace, avionics and defense other high tech industries local government







Figure 1 shows the definition of each industry group by SIC, as determined by ADOC. For the purpose of this analysis, the SICs listed in Figure 1 were converted to NAICS. Some of these industries are emerging industries in Arizona, while others are more traditional. There is also a mix of industries that are more concentrated in rural areas of the state, versus those whose presence is predominantly in urban areas. Given the broad range of industry types, there is an equally broad range of suppliers.



Figure 1-1 Definitions for Industries of Opportunity



Industry Group SICs Computer Software and Systems Integration 737 Healthcare and Biotechnology 283 and 80, excluding 805, 808 Industrial Machinery 35, excluding 352, 357 Telecommunications 481, 489, 366 High Tech Instruments 382, 384, 385 Forest Products 08, 24, 26 Engineering Research 873 Transportation and Logistics 40, 42 Agriculture, Food Processing and Ag Technology 01, 07, 20, 352 Defense, Aerospace and Avionics 372, 376, 381 Other High Tech 365, 367, 386, 871 Local Government 91







The first part of the study includes an analysis of secondary data and provides a basis for identifying potential gaps in the supply chain. The results are presented in Chapter 2. The second part of the study







1







presents the results of a survey of Arizona buyer industries, described in Chapters 3 and 4. This two-fold survey included both a web-based version and personal phone interviews. The purpose was to evaluate the existence of supplier gaps within the industries of opportunity and identify barriers and challenges to connecting buyers with local suppliers. Chapter 5 discusses models that are currently used in Arizona and other locations to connect buyers and suppliers.







2







2.0 Secondary Data Analysis



Identification of Suppliers by Industry



The first step in the secondary data analysis is to identify suppliers to each of the industries of opportunity based on national input-output data. Using data from IMPLAN, a national vendor of input-output software, it is possible to identify the volume of purchases made by each industry by commodity. Detailed results for Arizona's industries of opportunity are shown in Appendix A. In most cases, each industry group includes several sub-groups with distinctly different supplier requirements. Thus, in order to provide a more accurate analysis, the results are shown by industry subgroup. For each industry group, the distribution of major purchases by commodity is shown along with total commodity purchases and total industry output and employment nationally. The tables are intended to highlight the largest suppliers for each industry sub-group. In general, the demand from a particular industry group may not be large compared to total commodity production, but when added to demand from all other industries in Arizona there may be a deficit. It is not clear from the secondary data whether that deficit is causing a problem for the industries of opportunity. Note that input-output data used in this analysis distributes the value of production back to all contributing sectors. For example, if an industrial machinery manufacturer buys a component part from a wholesaler, some of the value of the part will be attributed to the wholesaler, some to transportation, some to the manufacturer of the part, and some to primary metal industries and other suppliers to the part manufacturer. In a typical local economy, not all of those industries will be present, so not all of the value of supplier purchases will be captured in the local economy. However, on a national basis, the vast majority of the purchase value can be distributed back to contributing sectors. The results on national purchasing patterns provide information on the relative importance of various suppliers as well as the overall size of each industry nationally. The volume of supply purchases by a given industry is of course directly proportional to the overall size of the industry. Thus, the fifth most important supplier to a very large industry may result in a larger volume of commodity purchases than the first most important supplier to a smaller industry. The overall size of each industry sub-group nationally can be compared based on employment and output. Top national suppliers by industry group are noted below: ? ? ? ? ? ? ? ? ? software and systems integration ? software publishers, advertising, telecommunications health care and biotech ? pharmaceutical manufacturing, lessors of intangible assets industrial machinery ? wholesale trade, iron and steel mills telecommunications ? communications equipment, lessors of intangible assets, electronic components, telecommunications high tech instruments ? wholesale trade, electronic components forest products ? forest product nurseries, agricultural support, sawmills, paper mills engineering research ? real estate, satellites transportation and logistics ? machinery and equipment leasing, truck transportation, automotive repair and maintenance agriculture, food processing and ag technology ? grain farming, all other crop farming, cattle ranching, animal food manufacturing, iron and steel mills, agricultural support







3







? ? ?







aerospace, avionics and defense ? electronic components, communication equipment, aircraft parts other high tech industries ? wholesale trade, photographic film, electronic components, sound recording local government ? other government entities, wholesale trade, telecommunications, real estate







The input-output data used in this analysis does not provide detail on wholesale trade, which is a larger supplier to many industries. The volume of purchases from the wholesale sector is in part an indicator of the amount of purchasing that occurs through wholesalers as opposed to directly from manufacturers. More importantly, the volume of purchases in the wholesale sector only represents the markup or contribution of the wholesaler to the final cost of the product. At the state or local level, wholesale will represent larger share of total commodity purchases than at the national level because many of the original manufacturers will be located elsewhere. Another interesting pattern that emerges from the national input-output data is that industries frequently buy from closely related industries, perhaps within the same SIC. Since any given industry may produce several products or commodities, it is possible and in fact frequent that these types of purchasing patterns occur. So for example, some industries in the telecommunications group, such as resellers, purchase a large amount of telecommunication services. Thus, a buyer industry and one of its primary suppliers fall within the same SIC. Overall, the list of the largest suppliers to each industry group is fairly diverse. However, among the top ten or so suppliers to each group, there is a fair amount of crossover with multiple industries of opportunity relying on many of the same types of suppliers.







Representation of Industries of Opportunity in Arizona



The next step in the analysis is to determine the share of buyer industries nationally that are present in Arizona. In this case, Arizona's share of national output by industry sub-group is used as a proxy for allocating the local share of supplier demand to the state. Output is a measure of the value of products or services being produced, based on a combination of labor costs, material costs and value added. Figure 2-1 shows Arizona's share of output and employment by industry within each industry group. Additional detail is provided in Appendix B.







4







Figure 2-1 Arizona Share of Employment and Output Industries of Opportunity



Industry Computer Software and Systems Integration Healthcare and Biotechnology Industrial Machinery Telecommunications High Tech Instruments Forest Products Engineering Research Transportation and Logistics Agriculture, Food Processing and Ag Technology Defense, Aerospace and Avionics Other High Tech Local Government Source: Minnesota IMPLAN Group, 2001 data. *Output in Millions Arizona Arizona Output* Employment $3,973 44,671 $15,501 143,558 $1,598 7,779 $5,086 25,625 $1,252 6,875 $1,666 11,756 $308 5,548 $2,955 22,363 $6,263 32,287 $9,493 37,265 $11,502 78,979 $10,012 140,789 National National Output* Employment $414,133 3,568,330 $1,045,985 9,020,752 $232,496 1,207,369 $452,925 1,645,249 $105,984 555,321 $263,854 1,327,784 $60,473 842,806 $235,685 1,803,349 $772,853 4,907,692 $168,743 647,779 $339,266 2,700,451 $540,280 8,809,610 Arizona Share Output Employment 1% 1% 1% 2% 1% 1% 1% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 6% 6% 3% 3% 2% 2%







In most cases, Arizona only represents 1 to 2 percent of both output and employment in each industry of opportunity, although there are a few key exceptions. Specific industries where Arizona represents a large share of national employment and/or output are listed below: ? ? ? ? ? ? Semiconductor machinery (5 percent of output and employment) Fluid meters and counting devices (7 percent of output, 6 percent of employment) Vegetable and melon farming (6 percent of output, 4 percent of employment) Aircraft engine and engine parts (8 percent of output and employment) Guided missile and space vehicle manufacturing (25 percent of output, 26 percent of employment) Semiconductors (11 percent of output, 12 percent of employment)







Although all the industries above represent key industry specialties within Arizona, it is important to remember that some of them are relatively small in terms of employment nationally. Arizona just happens to have a high concentration of employment in that small industry. Examples of specific industries where this is the case include guided missile and space vehicle manufacturing, semiconductor manufacturing and aircraft engine parts. There are other more ubiquitous industries where Arizona only represents a small percentage of national employment, but given the overall size of the industry nationally, it translates into a large number of Arizona employees and sizeable supplier demand. Industries that fall into this category and employ 15,000 or more people in Arizona include custom computer programming, doctor's offices, ambulatory health care, hospitals, telecommunications, truck transportation, and state and local government.1







Arizona Supplier Gaps Based on Secondary Data Analysis



The next step in the supplier analysis is to compare demand for specific commodities to Arizona commodity production. By applying Arizona's share of output to total national commodity purchases by







1







Semiconductor manufacturing also employs more than 15,000 people locally, but is more appropriately classified as a local industry specialty than a large ubiquitous industry.







5







industry, it is possible to estimate local commodity demand from the industries of opportunity in Arizona. Local (Arizona) commodity demand can then be compared to local commodity production to identify supplier gaps.2 Although it will never be the case that all local demand will be fulfilled by industries within Arizona, commodities that are being demanded by multiple local buyer industries are good targets for recruitment and expansion. Having a well developed supplier base is a cornerstone to building and sustaining Arizona's industries of opportunity. Figures 2-2 through 2-13 show the comparison between local demand from the industries of opportunity in Arizona, demand from all industries in Arizona and commodity production for the top 15 suppliers to each industry group. Commodities in bold are those where total Arizona demand from all industries exceeds Arizona commodity production. Additional commodity detail is shown in Appendix C.



Figure 2-2 Arizona Supplier Gaps for Software and Systems Integration Industries Millions of Dollars



Top 15 Suppliers Reproduction Info Services Programming & & Publishing Data Processing Systems Design $15.04 $20.94 $55.26 $23.90 $32.26 $17.40 $12.04 $32.22 $26.20 $12.23 $14.89 $25.32 $7.21 $9.22 $23.73 $18.71 $10.99 $6.98 $1.83 $13.24 $20.94 $5.28 $2.81 $24.52 $27.91 $0.00 $0.00 $0.96 $9.04 $13.44 $3.66 $5.41 $13.83 $7.12 $4.28 $10.73 $0.60 $7.45 $14.04 $4.17 $5.25 $7.01 $3.27 $5.10 $7.70 Software Total $91.23 $73.56 $70.46 $52.44 $40.16 $36.68 $36.01 $32.60 $27.91 $23.44 $22.90 $22.14 $22.09 $16.43 $16.08 Arizona Arizona Commodity Demand Production* All Industries $3,260.78 $1,734.37 $2,266.81 $3,155.27 $4,352.27 $5,299.03 $16,370.19 $12,092.21 $909.59 $833.44 $12,912.26 $10,831.49 $677.91 $874.31 $6,494.93 $1,698.13 $634.67 $725.68 $5,808.50 $4,104.53 $1,345.64 $1,055.66 $1,059.60 $1,350.04 $737.31 $552.98 $4,115.69 $5,985.75 $390.97 $1,602.96 $106,501.53 $92,258.54







Supplier Industries Employment services Advertising and related services Telecommunications Real estate Office administrative services W holesale trade Computer systems design services Lessors of nonfinancial intangible assets Software publishers Automotive repair and maintenance Services to buildings and dwellings All other electronic component manufacturing Data processing services Monetary authorities and depository intermediaries Colleges, universities, and junior colleges







Total Commodity Purchases (millions) $195.42 $286.76 $385.26 $867.45 Source: Minnesota IMPLAN Group, 2001 data. * Represents net commodity supply=industry commodity production + non-industry commodity production - foreign exports. Industries in bold represent potential supplier gaps







Local (Arizona) commodity production is defined as net commodity supply or industry commodity production plus non-industry commodity production less foreign exports.







2







6







Figure 2-3 Arizona Supplier Gaps for Healthcare and Biotech Industries Millions of Dollars



Top 15 Suppliers Doctors & Healthcare/ Supplier Industries Pharmaceuticals Hospitals Biotech Total Real estate $0.61 $992.56 $993.17 W holesale trade $22.74 $342.53 $365.27 Employment services $0.43 $318.08 $318.51 Legal services $1.50 $282.09 $283.59 Securities, commodity contracts, investments $0.38 $276.08 $276.46 Pharmaceutical and medicine manufacturing $32.26 $180.10 $212.37 Postal service $0.01 $188.47 $188.48 Management of companies and enterprises $15.82 $159.98 $175.80 Management consulting services $0.71 $172.22 $172.93 Food services and drinking places $0.88 $169.08 $169.96 Telecommunications $0.99 $147.47 $148.46 Plastics products $2.88 $136.44 $139.32 Office administrative services $0.14 $129.04 $129.18 Services to buildings and dwellings $0.18 $124.77 $124.95 Business support services $0.32 $121.36 $121.67 Total Commodity Purchases (millions) Source: Minnesota IMPLAN Group, 2001 data. $166.16 $4,868.32 $5,034.48 Arizona Arizona Commodity Demand Production* All Industries $16,370.19 $12,092.21 $12,912.26 $10,831.49 $3,260.78 $1,734.37 $2,141.72 $2,676.00 $2,751.35 $4,136.42 $338.40 $1,956.21 $1,012.70 $907.69 $1,857.85 $2,534.70 $1,643.20 $1,409.71 $7,694.15 $6,598.51 $4,352.27 $5,299.03 $751.03 $1,142.92 $909.59 $833.44 $1,345.64 $1,055.66 $1,862.11 $923.99 $92,859.38 $86,130.17







* Represents net commodity supply=industry commodity production + non-industry commodity production - foreign exports. Industries in bold represent potential supplier gaps







Figure 2-4 Arizona Supplier Gaps for Industrial Machinery Industries Millions of Dollars



Top 15 Suppliers Industrial Machinery $121.18 $48.06 $37.70 $35.13 $23.40 $16.56 $16.28 $16.19 $15.57 $15.27 $15.21 $14.83 $14.48 $13.51 $13.38 Arizona Commodity Production* $12,912.26 $129.70 $1,857.85 $77.50 $317.93 $157.65 $1,059.60 $2,435.78 $105.69 $6,494.93 $326.08 $20.74 $2.57 $220.88 $4.17 Arizona Demand All Industries $10,831.49 $571.25 $2,534.70 $174.04 $387.99 $159.59 $1,350.04 $2,524.18 $112.50 $1,698.13 $392.26 $115.95 $40.21 $297.18 $61.39







Supplier Industries W holesale trade Iron and steel mills Management of companies and enterprises Ferrous metal foundries Machine shops All other forging and stamping All other electronic component manufacturing Truck transportation Aluminum foundries Lessors of nonfinancial intangible assets AC, refrigeration and forced air heating Motor and generator manufacturing Speed changers, mechanical power transmission equipment Fabricated structural metal manufacturing Iron and steel forging







Total Commodity Purchases (millions) $615.64 $65,659.02 $62,994.37 Source: Minnesota IMPLAN Group, 2001 data. * Represents net commodity supply=industry commodity production + non-industry commodity production - foreign exports. Industries in bold represent potential supplier gaps







7







Figure 2-5 Arizona Supplier Gaps for Telecommunications Industries Millions of Dollars



Top 15 Suppliers Communication Telecom- Telecomm Equipment munication Total $2.31 $641.54 $643.85 $4.60 $107.05 $111.65 $6.43 $85.93 $92.36 $2.23 $81.46 $83.68 $74.61 $0.22 $74.83 $36.54 $25.92 $62.45 $25.96 $30.26 $56.22 $0.87 $51.77 $52.64 $32.28 $13.44 $45.72 $0.55 $36.53 $37.08 $2.01 $28.10 $30.10 $0.09 $27.71 $27.80 $0.05 $26.23 $26.27 $2.29 $21.95 $24.24 $2.42 $21.03 $23.45 $228.30 $1,283.82 $1,512.12 Arizona Arizona Commodity Demand Production* All Industries $4,352.27 $5,299.03 $2,998.84 $3,164.91 $140.47 $285.03 $2,266.81 $3,155.27 $423.20 $770.99 $6,494.93 $1,698.13 $12,912.26 $10,831.49 $1,006.87 $1,095.47 $1,059.60 $1,350.04 $1,219.21 $883.56 $16,370.19 $12,092.21 $490.64 $370.99 $354.96 $370.89 $837.48 $458.80 $4,115.69 $5,985.75 $68,707.49 $61,872.62







Supplier Industries Telecommunications Architectural and engineering services Telephone apparatus manufacturing Advertising and related services Broadcast and wireless communications equipment Lessors of nonfinancial intangible assets W holesale trade Accounting and bookkeeping services All other electronic component manufacturing Machinery and equipment rental and leasing Real estate Household goods repair and maintenance Specialized design services All other miscellaneous professional and technical Monetary authorities and depository intermediaries Total Commodity Purchases (millions) Source: Minnesota IMPLAN Group, 2001 data.







* Represents net commodity supply=industry commodity production + non-industry commodity production - foreign exports. Industries in bold represent potential supplier gaps







Figure 2-6 Arizona Supplier Gaps for High Tech Instrument Industries Millions of Dollars



Top 15 Suppliers High Tech Instruments $76.15 $38.96 $32.03 $21.32 $14.52 $12.73 $12.02 $9.14 $9.09 $9.08 $8.53 $8.25 $8.15 $7.90 $7.66 Arizona Commodity Production* $12,912.26 $1,059.60 $1,857.85 $1,862.11 $99.79 $751.03 $2,266.81 $217.73 $51.39 $2,141.72 $9.89 $2,998.84 $265.15 $304.99 $4,352.27 Arizona Demand All Industries $10,831.49 $1,350.04 $2,534.70 $923.99 $185.67 $1,142.92 $3,155.27 $449.75 $83.11 $2,676.00 $34.44 $3,164.91 $265.24 $1,204.19 $5,299.03







Supplier Industries W holesale trade All other electronic component manufacturing Management of companies and enterprises Business support services Surgical and medical instrument manufacturing Plastics products Advertising and related services Paperboard container manufacturing Electricity and signal testing instruments Legal services Textile and fabric finishing mills Architectural and engineering services Surgical appliance and supplies manufacturing Scientific research and development services Telecommunications







Total Commodity Purchases (millions) $395.15 $73,825.25 $68,807.41 Source: Minnesota IMPLAN Group, 2001 data. * Represents net commodity supply=industry commodity production + non-industry commodity production - foreign exports. Industries in bold represent potential supplier gaps







8







Figure 2-7 Arizona Supplier Gaps for Forest Product Industries Millions of Dollars



Top 15 Suppliers Logging & W ood Paper Supplier Industries Forest Pdts Products Products W holesale trade $0.86 $80.70 $46.26 Sawmills $0.03 $110.91 $9.07 Logging $3.36 $94.44 $15.80 Paper and paperboard mills $0.00 $0.41 $93.82 Truck transportation $0.05 $29.70 $17.70 Forest nurseries, forest products and timber tracts $6.31 $33.63 $0.00 Automotive repair and maintenance $0.56 $11.30 $12.04 Management of companies and enterprises $0.13 $7.16 $15.21 Natural gas distribution $0.22 $4.81 $13.46 Power generation and supply $0.02 $8.83 $9.01 Miscellaneous wood product manufacturing $0.00 $16.05 $0.01 Pulp mills $0.00 $0.00 $13.68 Veneer and plywood manufacturing $0.00 $13.38 $0.03 Cut stock, resawing lumber and planing $0.00 $11.26 $0.01 Commercial machinery repair and maintenance $0.26 $5.20 $5.51 Forest Pdts Total $127.82 $120.00 $113.59 $94.24 $47.44 $39.94 $23.90 $22.50 $18.49 $17.86 $16.06 $13.68 $13.41 $11.27 $10.97 Arizona Arizona Commodity Demand Production* All Industries $12,912.26 $10,831.49 $22.65 $461.04 $26.71 $20.60 $113.96 $676.03 $2,435.78 $2,524.18 $20.84 $18.85 $5,808.50 $4,104.53 $1,857.85 $2,534.70 $1,074.38 $1,417.70 $4,919.68 $3,102.05 $44.47 $104.95 $6.05 $16.16 $1.59 $169.42 $10.10 $56.85 $834.42 $534.52







Total Commodity Purchases (millions) $18.40 $474.07 $294.48 $786.94 $53,883.37 $51,340.54 Source: Minnesota IMPLAN Group, 2001 data. * Represents net commodity supply=industry commodity production + non-industry commodity production - foreign exports. Industries in bold represent potential supplier gaps







Figure 2-8 Arizona Supplier Gaps for Engineering Research Services Millions of Dollars



Top 15 Suppliers Engineering Services $19.96 $2.70 $1.72 $1.44 $1.18 $1.11 $1.09 $0.82 $0.80 $0.76 $0.69 $0.69 $0.64 $0.64 $0.60 Arizona Commodity Production* $2,890.32 $16,370.19 $3,260.78 $96.08 $2,141.72 $12,912.26 $491.89 $4,352.27 $909.59 $837.48 $1,643.20 $2,998.84 $138.07 $750.57 $423.20 Arizona Demand All Industries $1,173.37 $12,092.21 $1,734.37 $223.04 $2,676.00 $10,831.49 $566.54 $5,299.03 $833.44 $458.80 $1,409.71 $3,164.91 $331.27 $1,672.57 $770.99







Supplier Industries Guided missile and space vehicle manufacturing Real estate Employment services Glass and glass products- except glass containers Legal services W holesale trade Commercial printing Telecommunications Office administrative services All other miscellaneous professional and technical Management consulting services Architectural and engineering services Periodical publishers Maintenance and repair of nonresidential buildings Broadcast and wireless communications equipment







Total Commodity Purchases (millions) $39.76 $70,539.47 $62,246.08 Source: Minnesota IMPLAN Group, 2001 data. * Represents net commodity supply=industry commodity production + non-industry commodity production foreign exports. Industries in bold represent potential supplier gaps







9







Figure 2-9 Arizona Supplier Gaps for Transportation and Logistics Industries Millions of Dollars



Top 15 Suppliers Rail T ru c k Transport Transport Transport T otal $1.26 $269.76 $271.02 $0.01 $156.73 $156.74 $35.62 $101.57 $137.19 $9.23 $114.63 $123.86 $8.27 $112.23 $120.50 $0.14 $65.25 $65.40 $3.42 $43.51 $46.92 $34.85 $9.87 $44.72 $0.02 $37.75 $37.77 $0.29 $31.46 $31.75 $0.23 $28.02 $28.25 $0.00 $25.86 $25.86 $1.30 $22.42 $23.72 $4.35 $16.63 $20.98 $0.82 $16.77 $17.59 Arizona Arizona Commodity Demand Production* All Industries $2,435.78 $2,524.18 $5,808.50 $4,104.53 $697.27 $673.00 $12,912.26 $10,831.49 $42.77 $2,744.31 $3,859.06 $4,631.49 $797.02 $1,832.00 $1,219.21 $883.56 $475.31 $480.22 $3,017.58 $1,408.71 $4,352.27 $5,299.03 $1,857.85 $2,534.70 $16,370.19 $12,092.21 $1,643.20 $1,409.71 $333.58 $450.47







Supplier Industries Truck transportation Automotive repair and maintenance Scenic and sightseeing transportation and support W holesale trade Petroleum refineries Insurance carriers Motor vehicle parts manufacturing Machinery and equipment rental and leasing Warehousing and storage Automotive equipment rental and leasing Telecommunications Management of companies and enterprises Real estate Management consulting services Rail transportation







Total Commodity Purchases (millions) $155.75 $1,131.96 $1,287.72 $74,065.59 $67,271.70 Source: Minnesota IMPLAN Group, 2001 data. * Represents net commodity supply=industry commodity production + non-industry commodity production - foreign exports. Industries in bold represent potential supplier gaps







Figure 2-10 Arizona Supplier Gaps for Agriculture, Food Processing and Ag Technology Industries Millions of Dollars



Top 15 Suppliers Food Farm & Garden Processing Equipment $329.53 $0.00 $262.69 $22.05 $80.28 $0.00 $15.75 $0.00 $8.64 $0.40 $8.60 $0.00 $0.00 $0.00 $118.96 $0.00 $65.23 $5.53 $81.37 $0.00 $76.37 $4.97 $80.23 $0.00 $73.78 $0.19 $2.53 $0.13 $69.43 $0.09 Agriculture Total $486.41 $416.41 $201.37 $181.88 $181.70 $172.79 $164.45 $136.41 $101.89 $90.55 $81.34 $80.36 $75.91 $74.28 $69.52 Arizona Arizona Commodity Demand Production* All Industries $1,139.49 $733.50 $12,912.26 $10,831.49 $37.22 $178.98 $70.47 $116.48 $16,370.19 $12,092.21 $173.30 $244.25 $493.87 $198.88 $13.35 $72.20 $2,435.78 $2,524.18 $40.12 $185.16 $1,857.85 $2,534.70 $379.52 $580.29 $217.73 $449.75 $42.77 $2,744.31 $6,494.93 $1,698.13







Supplier Industries Cattle ranching and farming W holesale trade Grain farming Other animal food manufacturing Real estate All other crop farming Agriculture and forestry support activities Poultry and egg production Truck transportation Animal production- except cattle and poultry Management of companies and enterprises Animal slaughtering, except poultry Paperboard container manufacturing Petroleum refineries Lessors of nonfinancial intangible assets







Agriculture $156.87 $131.66 $121.09 $166.12 $172.66 $164.19 $164.45 $17.46 $31.13 $9.18 $0.00 $0.13 $1.94 $71.61 $0.00







Total Commodity Purchases (millions) $1,519.56 $1,948.75 $126.31 $3,594.62 $75,991.61 $73,510.19 Source: Minnesota IMPLAN Group, 2001 data. * Represents net commodity supply=industry commodity production + non-industry commodity production - foreign exports. Industries in bold represent potential supplier gaps







10







Figure 2-11 Arizona Supplier Gaps for Aerospace, Avionics and Defense Industries Millions of Dollars



Top 15 Suppliers Search & Nav. Aircraft and Instruments Space Vehicles $67.36 $378.93 $0.00 $379.91 $0.86 $299.99 $0.00 $285.19 $54.99 $183.62 $0.00 $209.99 $77.02 $132.50 $34.53 $159.15 $0.00 $165.83 $14.50 $99.05 $11.75 $76.83 $0.02 $67.25 $7.97 $51.41 $0.07 $56.30 $4.59 $50.71 Aerospace Total $446.29 $379.91 $300.85 $285.19 $238.62 $209.99 $209.52 $193.67 $165.83 $113.55 $88.58 $67.27 $59.39 $56.37 $55.30 Arizona Commodity Production* $12,912.26 $382.55 $1,108.23 $672.86 $423.20 $2,890.32 $1,059.60 $1,857.85 $478.33 $2,998.84 $304.99 $472.67 $4,115.69 $63.49 $751.03 Arizona Demand All Industries $10,831.49 $521.51 $1,071.01 $1,091.42 $770.99 $1,173.37 $1,350.04 $2,534.70 $1,214.39 $3,164.91 $1,204.19 $512.91 $5,985.75 $211.01 $1,142.92







Supplier Industries W holesale trade Other aircraft parts and equipment Search, detection and navigation instruments Aircraft engine and engine parts manufacturing Broadcast and wireless communications equipment Guided missile and space vehicle manufacturing All other electronic component manufacturing Management of companies and enterprises Propulsion units and parts for space vehicles Architectural and engineering services Scientific research and development services Metal valve manufacturing Monetary authorities and depository intermediaries Miscellaneous fabricated metal products Plastics products







Total Commodity Purchases (millions) $455.90 $3,495.71 $3,951.60 $82,652.59 $77,119.74 Source: Minnesota IMPLAN Group, 2001 data. * Represents net commodity supply=industry commodity production + non-industry commodity production - foreign exports. Industries in bold represent potential supplier gaps







Figure 2-12 Arizona Supplier Gaps for Other High Tech Industries Millions of Dollars



Top 15 Suppliers Photographic Media Architecture Equipment Recording & & & Supplies Reproduction Electronics Engineering $0.53 $0.05 $417.17 $0.57 $7.24 $0.69 $363.81 $6.15 $0.24 $0.00 $194.87 $0.00 $0.28 $0.06 $49.60 $129.93 $0.32 $0.01 $114.48 $0.17 $1.06 $0.15 $97.38 $7.56 $0.00 $0.00 $85.58 $0.00 $0.14 $0.26 $21.39 $60.58 $0.01 $0.00 $1.01 $75.62 $0.08 $0.15 $4.66 $56.99 $1.45 $0.06 $55.08 $4.80 $0.18 $0.15 $24.72 $28.79 $0.09 $0.03 $40.11 $6.73 $0.42 $0.10 $28.40 $16.48 $0.11 $0.91 $31.90 $10.14 Arizona Arizona Commodity Demand Production* All Industries $1,059.60 $1,350.04 $12,912.26 $10,831.49 $423.20 $770.99 $2,998.84 $3,164.91 $1,799.33 $790.04 $1,857.85 $2,534.70 $414.16 $648.72 $16,370.19 $12,092.21 $333.36 $270.74 $3,260.78 $1,734.37 $6,494.93 $1,698.13 $4,352.27 $5,299.03 $677.91 $874.31 $4,115.69 $5,985.75 $2,266.81 $3,155.27 $96,206.68







Supplier Industries All other electronic component manufacturing W holesale trade Broadcast & wireless communication equipment Architectural and engineering services Semiconductors and related device manufacturing Management of companies and enterprises Semiconductor machinery manufacturing Real estate Environmental and other technical consulting svcs Employment services Lessors of nonfinancial intangible assets Telecommunications Computer systems design services Monetary authorities & depository intermediation Advertising and related services







High Tech T otal $418.32 $377.89 $195.12 $179.87 $114.98 $106.16 $85.58 $82.37 $76.64 $61.89 $61.39 $53.84 $46.96 $45.40 $43.07







Total Commodity Purchases (millions) $31.10 $6.38 $2,050.37 $648.75 $2,736.60 $106,225.93 Source: Minnesota IMPLAN Group, 2001 data. * Represents net commodity supply=industry commodity production + non-industry commodity production - foreign exports. Industries in bold represent potential supplier gaps







11







Figure 2-13 Arizona Supplier Gaps to State and Local Government (Non-Education) Millions of Dollars



Top 15 Suppliers State & Local Govt $7,161.99 $406.67 $278.41 $271.60 $251.84 $246.19 $210.03 $187.16 $158.84 $156.44 $149.95 $138.33 $114.51 $103.54 $100.09 $10,375.77 Arizona Commodity Production* $5,804.53 $16,370.19 $2,751.35 $4,115.69 $12,912.26 $4,352.27 $3,260.78 $2,141.72 $1,345.64 $7,694.15 $1,012.70 $1,724.61 $1,643.20 $655.96 $1,006.87 $71,797.77 Arizona Demand All Industries $5,804.53 $12,092.21 $4,136.42 $5,985.75 $10,831.49 $5,299.03 $1,734.37 $2,676.00 $1,055.66 $6,598.51 $907.69 $1,052.76 $1,409.71 $498.12 $1,095.47 $66,123.82







Supplier Industries State & Local Non-Education Real estate Securities, commodity contracts, investments Monetary authorities and depository credit intermediaries W holesale trade Telecommunications Employment services Legal services Services to buildings and dwellings Food services and drinking places Postal service Hotels and motels Management consulting services Electronic equipment repair and maintenance Accounting and bookkeeping services Total Commodity Purchases (millions) Source: Minnesota IMPLAN Group, 2001 data.







* Represents net commodity supply=industry commodity production + non-industry commodity production - foreign exports. Industries in bold represent potential supplier gaps







In general, the demand from a particular industry group may not be large compared to total commodity production, but when added to demand from all other industries in Arizona there is a deficit. It is not clear from the secondary data whether that deficit is causing a problem for the industries of opportunity. However, it would appear from this analysis that Arizona is a net importer of many manufactured goods that are used by the industries of opportunity. Some of the gaps that do exist are in industries that rely heavily on natural resources and are not likely to expand in Arizona such as pulp mills, logging and grain farming. There are however other industries that appear as gaps in multiple clusters, resulting in a high volume of overall demand, may be good candidates for expansion such as wireless communication equipment, electronic components, computer systems design services and plastic products. It is important to note that since any given industry sub-group may produce a number of specific products and services, not every industry in the sub-group may demand every commodity listed. Depending on the specific products and services produced in Arizona, relative demand for individual commodities may vary. In general, the importance of having local suppliers is proportional to the cost of transporting a particular commodity, perishability, and the just-in-time nature of production in a given buyer industry. For example, although there may be gaps for certain suppliers like petroleum refineries, the lack of refineries in Arizona is certainly not a limiting factor in the ability of local industries to obtain gasoline and related petroleum products. In other cases, there may be demand for very specialized products that are hard to find or difficult to transport, and local availability may be very important.







12







County Level Commodity Production



Although the objective of this study is to find better ways to connect Arizona buyers and Arizona suppliers, the location of buyers within the state may be an issue for certain types of industries. Due to its relatively larger business base, Maricopa County produces the majority of commodities in most categories (Figure 2-14), and 80 percent of the commodities required by the industries of opportunity. However, there are some exceptions. The figure below details share of commodity production by county in terms of output value.



Figure 2-14 Commodity Production by County*



Apache, 0% Yuma, 1% Yavapai, 1% Santa Cruz, 0% Pinal, 1% Pima, 12% Mohave, 1% Navajo, 1% Cochise, 1% Coconino, 1% La Paz, 0% Graham, 0% Greenlee, 0% Gila, 0%







Maricopa, 80% *For composite of commodities required by industries of opportunity.







?







? ? ? ?







Pima County has the highest production statewide in a number of specialized manufactured goods including guided missiles and space vehicles, propulsion units for space vehicles, agricultural chemicals, hardware manufacturing, surgical and medical instruments, surgical appliances, communication equipment as well as services such as software publishing and scientific research and development services. Coconino County has especially high production of surgical appliances as well as logging and forest nursery products. Yuma County, and to a lesser extent Pinal County, have an established base of agricultural suppliers utilized by the industries of opportunity such as oilseed farming, agricultural support activities, vegetable and melon farming, dry and condensed dairy products and nursery products. Navajo County has a significant base of suppliers to the forest products group such as logging, nursery products, pulp mills and paper mills. In a few cases, there is little or no Arizona production at all such as for glass containers and ball bearings.







13







Figure 2-15 shows commodity production by county for a composite list of the top 25 commodities where state-level gaps may exist based on demand from all industries of opportunity. Commodities with state level supply gaps are shown in bold. Top commodities overall where local demand exceeds local supply include telecommunications, electronic components, management of companies and enterprises, truck transportation, broadcast and wireless communication equipment and aircraft parts. Additional commodity detail is shown in Appendix D. It is important to keep in mind that the supplier gaps identified here are specific to the historical data used in the analysis. It is likely that that mix of commodities produced in Arizona will change in the future. More research on industry growth projections compared to commodities where apparent gaps exist could shed light on this issue. Additionally, some commodities such as electronic component manufacturing will be more vulnerable to global pressures. Other commodities such as aircraft engine parts, petroleum refineries could be vulnerable to other macro conditions such as oil price shocks and these factors will affect future production in Arizona. Beyond identifying gaps and targeting supplier industries for expansion, the more important factor is whether or not industries that demand products that are currently being produced in Arizona are in fact purchasing locally. It is not possible to ascertain the actual buying patterns of individual businesses from this secondary data, but this information is available through the buyer survey.







14







Figure 2-15 Commodity Production by County for Key Commodities Millions of Dollars







Demand from Arizona Industries of Commodity Top 25 Suppliers to Industries of Opportunity Opportunity Production* Telecommunications $1,162.83 $4,352.27 All other electronic component manufacturing $782.34 $1,059.60 Management of companies and enterprises $531.59 $1,857.85 Truck transportation $525.31 $2,435.78 Monetary authorities and depository intermediaries $517.36 $4,115.69 Broadcast and wireless communications equipment $514.47 $423.20 Architectural and engineering services $452.31 $2,998.84 Other aircraft parts and equipment $379.91 $382.55 Securities, commodity contracts and investments $376.84 $2,751.35 Advertising and related services $371.77 $2,266.81 Legal services $315.92 $2,141.72 Aircraft engine and engine parts manufacturing $285.19 $672.86 Petroleum refineries $202.36 $42.77 Grain farming $201.37 $37.22 Accounting and bookkeeping services $198.78 $1,006.87 Other animal food manufacturing $181.88 $70.47 All other crop farming $172.79 $173.30 Propulsion units and parts for space vehicles $165.83 $478.33 W arehousing and storage $153.83 $475.31 Computer systems design services $145.23 $677.91 Scientific research and development services $144.30 $304.99 Plastics products $138.44 $751.03 Poultry and egg production $136.41 $13.35 Sawmills $120.00 $22.65 Paperboard container manufacturing $119.54 $217.73 Apache $19.94 $0.05 $0.00 $0.57 $16.25 $0.21 $2.70 $0.03 $0.32 $0.80 $7.29 $0.00 $0.00 $0.12 $1.37 $0.00 $0.77 $0.08 $1.17 $0.00 $0.00 $0.00 $0.27 $4.11 $0.00 Cochise Coconino $36.09 $23.44 $14.13 $0.21 $6.13 $13.70 $26.88 $54.29 $27.81 $72.40 $0.09 $1.80 $38.80 $19.81 $0.02 $1.12 $14.16 $19.03 $16.83 $37.90 $5.84 $24.72 $0.01 $0.16 $0.00 $0.00 $7.83 $0.06 $2.21 $9.86 $0.00 $0.33 $7.43 $0.42 $0.02 $0.04 $8.06 $4.91 $45.45 $2.19 $1.02 $9.79 $0.24 $11.97 $1.52 $0.53 $0.25 $0.10 $0.00 $0.02 Gila $7.59 $1.01 $9.11 $7.29 $16.58 $0.01 $2.34 $0.00 $0.82 $10.01 $1.60 $0.00 $0.00 $0.08 $0.58 $0.00 $0.35 $0.00 $0.00 $1.72 $0.74 $0.01 $0.00 $0.02 $0.00 Graham Greenlee $0.85 $0.00 $0.00 $0.00 $0.52 $0.00 $4.74 $3.73 $9.27 $0.76 $0.00 $0.00 $1.39 $0.10 $0.01 $0.00 $1.34 $0.02 $14.37 $1.64 $1.07 $0.53 $0.22 $0.00 $0.00 $0.00 $0.24 $0.26 $1.02 $0.21 $0.00 $0.00 $0.18 $1.09 $0.01 $0.00 $0.00 $0.00 $0.95 $0.00 $0.00 $0.00 $0.30 $0.00 $0.00 $0.57 $0.00 $0.00 $0.00 $0.00 Commodity Production by County* La Paz Maricopa Mohave $3.83 $3,902.95 $71.11 $0.00 $1,257.82 $8.30 $0.00 $1,839.69 $10.39 $3.25 $2,112.03 $58.25 $5.30 $3,409.10 $57.20 $0.00 $385.37 $0.39 $0.82 $2,448.80 $64.44 $0.00 $944.01 $15.44 $0.10 $2,482.91 $14.10 $3.21 $1,657.06 $47.32 $1.03 $1,771.41 $12.37 $0.00 $1,803.69 $1.03 $0.00 $41.63 $1.56 $0.88 $14.72 $0.19 $1.13 $856.81 $16.85 $3.50 $37.58 $0.00 $21.63 $85.24 $1.36 $0.00 $177.72 $0.55 $0.00 $395.55 $0.39 $0.00 $570.65 $1.29 $0.00 $130.12 $0.76 $0.01 $623.66 $75.03 $0.00 $7.12 $0.00 $0.00 $5.48 $0.03 $0.00 $168.92 $0.15 Navajo $23.10 $0.00 $6.38 $19.98 $33.92 $0.00 $2.99 $0.00 $1.93 $38.46 $4.69 $0.00 $0.00 $2.08 $3.73 $0.00 $4.27 $0.00 $0.00 $0.08 $1.90 $0.07 $0.00 $13.26 $0.00 Pima $237.21 $113.14 $181.67 $195.08 $499.76 $88.31 $453.27 $135.69 $258.37 $343.49 $297.54 $18.63 $0.07 $1.16 $91.69 $0.00 $2.68 $298.70 $32.03 $60.30 $154.14 $115.35 $0.00 $0.16 $28.53 Pinal Santa Cruz $16.67 $4.43 $10.52 $16.41 $6.80 $8.80 $34.54 $32.05 $44.11 $11.82 $0.02 $0.08 $23.82 $0.73 $0.00 $27.02 $1.22 $2.52 $14.45 $4.77 $6.05 $3.76 $0.00 $0.51 $0.00 $0.00 $10.08 $0.26 $1.80 $4.44 $32.07 $0.00 $20.69 $0.19 $0.00 $0.89 $1.59 $24.36 $0.76 $0.00 $9.68 $0.00 $3.49 $0.23 $0.66 $0.26 $0.08 $0.02 $0.01 $0.00 Yavapai $30.23 $2.72 $3.13 $35.81 $71.39 $22.24 $38.89 $52.49 $35.57 $40.28 $21.78 $1.01 $0.00 $0.90 $11.50 $0.00 $1.87 $1.86 $2.48 $3.94 $1.10 $14.30 $2.55 $0.13 $0.02







Yuma $39.77 $5.38 $11.88 $41.22 $61.10 $0.02 $17.08 $0 .33 $9.55 $49.44 $20.59 $0.04 $0.00 $9.55 $9.68 $0.01 $32.74 $0.03 $11.30 $0.24 $0.87 $0.25 $0.00 $0.91 $28.59







15







3.0 Survey Sample Selection and Design



Identification of Survey Participants



Participants were selected for the web survey based primarily on industry type and availability of a purchasing or operations contact. The industry selections included twelve industries of opportunity consistent with the secondary data analysis. These industries were identified as part of the Statewide Economic Study prepared for the Arizona Department of Commerce (ADOC). ? ? ? ? ? ? ? ? ? ? ? ? software and systems integration health care and biotech industrial machinery telecommunications high tech instruments forest products engineering research transportation and logistics agriculture, food processing and ag technology aerospace, avionics and defense other high tech industries local government







Company contact records were purchased from Dun & Bradstreet for 1,042 establishments in these industries. About 237 additional company names for major employers outside these industries of opportunity were added by the Department of Commerce and the Southern Arizona Technology Council. All data was carefully reviewed to eliminate duplicate records and fill in missing contact information. Based on the types of industries included, about 278 of the companies had less than 10 employees. Since these companies do not make significant supplier purchases due to their size, and because they would be less likely to respond to this type of web survey in general, a decision was made to limit the list to companies with 10 or more employees. Also, some specific industries that fell into the twelve industries of opportunity above were eliminated because they were not basic industries and did not meet the general objectives of the survey. The result was to delete 261 companies that fell into the following categories: medical, dental and chiropractic offices; rehab facilities; landscape companies; pet groomers; veterinarians; kennels; market research and other nonphysical, non-scientific research. The final list included 679 companies. From this list, 19 were selected for personal interviews. The personal interviews were generally larger companies (75 or more employees) in high tech and telecommunications industries. Employers in these industries tended to represent the largest employers in the survey sample. Of the list of potential survey participants 48 percent were in Maricopa County, 36 percent were in Pima County, and the remainder was spread throughout the state. The personal interviews were primarily with firms in Maricopa County, but included a few representative companies from Coconino and Pima counties. The largest industry groups among potential survey participants were industrial machinery and high tech, each making up 24 to 29 percent of the potential participants. Other larger industry groups included agriculture/food processing, major employers, instruments and health care/biotech. However, all of the industry groups had at least 8 potential participants on the survey list.







16







Survey Design



Both the web-based survey and personal interviews were designed to gather information from buyer industries about their purchasing patterns, policies, issues and challenges. Questions included topics such as centralized purchasing trends, certification requirements for suppliers, most important factors in choosing suppliers, methods for identifying potential suppliers, types of products currently purchased locally, types of products not purchased locally and reasons why not, anticipated future purchasing trends in and out of Arizona, likelihood of future off-shoring of purchases and other general business climate issues that may be impeding local industry growth. Participants were categorized by industry, employment size, location and purchasing volume. A copy of the web-based survey instrument is included in Appendix E. The personal interviews included additional questions about past experiences using local suppliers, purchases outside of Arizona and outside the United States, challenges in purchasing off shore and actions that the Department of Commerce might take to increase local purchasing. A copy of the interview script is included in Appendix F.







Survey Launch and Promotion



All potential survey participants were sent a personal letter explaining the objectives of the study and inviting them to participate in the survey. A separate version of this letter was sent to businesses that were selected for personal interviews. The web-based survey was available from April 14, 2005 to June 30, 2005. During the first several weeks of the survey, potential web-survey participants were sent a series of three postcards reminding them of how important it was for them to "share their views" with the Arizona Department of Commerce. During the last week of the survey, personal telephone calls were made to companies encouraging them to spend ten minutes responding to the survey questions. As an additional incentive, survey participants were invited to supply their contact information and be entered into a prize drawing. Data from the completed surveys are presented and analyzed in this report. Approximately 17 businesses did not receive mailings due to bad addresses. Of the remaining 643 companies, 46 completed the on-line survey (7.2 percent response rate), and their responses are detailed in this report. Telephone interviews were conducted to supplement the online survey and obtain more in-depth information on companies' purchasing practices. From a target list of 19 companies, 9 interviews were successfully completed. These particular companies were selected by the Department of Commerce because they represent large buyers and industries critical to Arizona's economic base. Including the telephone interviews, the overall response rate was 8.3 percent. Note that several of the companies on the list for personal interviews were unable to participate because all purchasing is done from a central location outside of Arizona. Because the response rate to the survey was relatively low, there is a good likelihood of a non-response bias and the survey results should be viewed with this in mind.







17







4.0 Survey Results



The survey results shown below include a profile of the respondents in terms of industry mix, size, purchasing volumes and location, followed by details on how purchasing decisions are made and the types of goods and services being purchased in and out of Arizona. Results for the web-based survey and the personal interviews are combined in the tables and graphs.







Respondent Profile



The participants in the web survey represented a broad mix of firms in terms of industry type, employment size and annual purchasing volumes. Figure 4-1 shows the comparison of the industry sectors included in the survey population with the respondents. All industry sectors except for telecommunications and ag/food processing were representative of the total survey sample. Note that in some cases the response group is larger than the sample for a given industry. Respondents placed themselves into industry groups as part of the survey and their classifications may have been different than the industry of opportunity they were associated with in the sample.







Figure 4-1 Industry Makeup of Survey Sample Versus Respondents



30% 25% 20% 15% 10% 5% 0%



oo d Pr D oc ef en es se si ng /A er En os gi pa ne ce er in Fo g/ R G re &D ov st er Pr nm od en uc t/E ts H ea du lth ca C tio ar n e/ Bi ot ec In h H du ig h st Te ria ch lM ac hi ne In ry st ru m en Te ts So le co ftw Tr m ar an m e un sp ic or at ta io tio ns n/ Lo M gi aj st or Em ics pl oy C er O on s th st er ru M O ct th an io n er uf ac Se tu rv rin ic es g & Re ta il







Sample Response







The employment size of businesses responding to the survey ranged from less-than-50 to over-1,000 (Figure 4-2). These figures include Arizona employees only. Over 60 percent of responses came from companies on each end of the spectrum (0-50 employees and over 1,000 employees) A slightly greater number of responses came from smaller companies (those employing 50 or less).







Ag /F







18







Figure 4-2 Employment Size of Survey Respondents



Less than 50 36% 51 to 100 16% 101 to 250 16%







More than 1,000 28%







251 to 500 12% 501 to 1,000 20%







The total volume of supplier purchases made by these companies generally corresponded to employment size, although purchase volume is also largely a function of industry type and the implied ratio of materials to labor. About half of respondents purchase less than $5 million per year in goods and services, although a full 20 percent purchase more than $100 million annually (Figure 4-3). Over 70 percent of respondents expect to increase their volume of purchases in the 2004-2005 fiscal year.







Figure 4-3 Survey Respondents by Annual Purchasing Volume*



Less than $1M 20% $1M to $5M 32%







More than $200M 12% $101M to $200M 8% $51M to $100M 4%







$6M to $10M 4%







$11M to $50M 20%







*Purchasing volume based on 2003-2004 fiscal year.







19







The final piece of information used to profile respondents was location. The sample was heavily weighted toward Maricopa and Pima Counties, because these counties account for the largest share of the state's businesses. All counties in the state except for Greenlee were represented in the sample. Figure 44 compares the geographic distribution of the sample relative to the respondent pool. Note that some companies marked multiple locations in their responses, although the sample reflects only the mailing addresses of the primary respondents. In general, the response from the rural areas was good, representing a greater than proportional share relative to the sample.







Figure 4-4 Geographic Distribution of Survey Sample Versus Respondents



50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%



Pa z M ar ic op a M oh av e N av aj o en le e Ap ac he C oc hi se C oc on in o Pi na l ila z ha m ai Ya va p G ra La Yu m a Pi m a Cr u G







Sample Response







Purchasing Decisions



This next section of the survey describes the process and criteria used in making purchasing decisions. There are two key issues that impact the ability of state and local government to provide procurement assistance. These include whether purchasing is done from a central location, such as a headquarters outside Arizona, and whether all purchasing is done by purchasing department personnel. For the companies that responded to the survey, almost all indicated that most purchasing for their Arizona operations is done at a centralized facility located within the state. This is significant because it makes it easier for ADOC or local economic development organizations to develop relationships with local buyers. However, close to 40 percent of respondents also noted that purchases under $5,000 could be made by non-purchasing personnel. It is common, particularly among high tech employers that purchases below a certain amount can be made by non-purchasing personnel who are more directly involved in the production process. This can make it very difficult for outside organizations to track the types of purchases that are being made and to establish meaningful contacts within a company.







Sa nt a







G re







20







Companies use a wide variety of methods to identify suppliers and potential suppliers (Figure 4-5). It is interesting to note that one of the most common methods used to identify suppliers is the Internet. This is significant because almost any size local supplier could develop a web site and gain a presence on the Internet that may allow them to connect with large local buyers. In contrast, firms that rely on their own records or the experience of their purchasing agents, which are the second and third most common identification methods, may be more difficult for new suppliers or smaller suppliers to reach. Other supplier identification options used by survey participants such as vendor directories, catalogues and trade journals are less difficult to gain access to for suppliers; although there are often many choices of directories and catalogues, and it can be difficult for a small supplier to allocate advertising dollars effectively.







Figure 4-5 Supplier Identification Methods



Internet Search Firm Records, Previous Contacts Own Experience Catalogues Advertisement for Bids Trade Journals Government Procurement Vendor Directories W ord of Mouth and Referrals Sales Force Industry Associations Trade Shows Manufacturer's Reps Distribution Channels Second Sourcing 0% 2% 4% 6% 8% 10 % 12% 14% 1 6% 18%







Often the methods used depend on the commodity or service being purchased and/or contract requirements. Noted below are the comments on the restrictions or limitations some companies face when choosing suppliers; particularly high technology companies. ? ? they go where they can purchase the technology government contractors are restricted to buying from approved vendors (indirect purchases are made from local companies and Internet)







21







?







suppliers are selected primarily based on their ability to deliver very specific technology







Because the firms responding to the survey encompass a range of industry sectors ? services, industrial manufacturing, government, health care, etc. ? it is expected that the criteria for their purchasing decisions would also cover a range of factors. Survey respondents were asked to rank seven factors by level of importance that they use when choosing suppliers (Figure 4-6). Quality of the product was by far the most important to buyers with 96 percent of buyers ranking quality as most important or very important. Reliability of delivery was ranked most important or very important by 89 percent of buyers. Other key factors included price and service/maintenance. It is interesting to note that geographic proximity rated virtually the same as the supplier having a web presence. Having on-line interface was noted as a key feature of web presence. In general, buyers appear to have limited interest in the physical location of vendors, relative to other factors. For products that must be purchased locally, survey respondents indicated that suppliers located outside metro Phoenix or Tucson would be sufficiently close for most products.







Figure 4-6 Criteria Used to Select Suppliers



Most Very Slightly Important Important Important Important 15 28 12 0 27% 51% 22% 0% 20 37% 34 61% 12 22% 4 7% 1 2% 2 4% 28 52% 20 36% 27 49% 22 40% 9 16% 7 13% 5 9% 2 4% 14 25% 24 44% 18 33% 13 24% 1 2% 0 0% 1 2% 5 9% 18 33% 23 43% Not Important 0 0% 0 0% 0 0% 1 2% 0 0% 9 16% 9 17%







Price







Reliability of Delivery







Quality of Product







Supplier's Service/Maintenance







Historical Relationship with Supplier







Geographic Proximity







W eb Presence







In addition to general criteria for selecting suppliers, companies were also asked to indicate specific requirements. Almost 60 percent of the companies responded that they have no specific requirements for purchasing, however many indicated that there are factors and/or service features that influence their decisions. The most common factors included: ? Ownership (minority, women, or veteran-owned) (47 percent)







22







? ? ? ? ?







Shipping, Receiving, and Inspection Services (18 percent) Warehouse distribution (14 percent) Bondable (14 percent) ISO 9000 Compliance (11 percent)3 Training and Field Servicing (11 percent)







Of the 27 specific requirements that were listed in the survey, all but three are considered by at least one of the companies' responding (the exceptions are: AS 9100, CE Mark, and RoHS Compliance).4 Other items noted as important factors when selecting suppliers include: ? ? ? ? Technology -- technical expertise, electronic interface, the supplier's ability to match and keep up with the company's level of technology Capacity -- ability to take on additional orders, ability to handle custom work, timely delivery, willingness to provide sample products Financial -- viability of company, accuracy of invoicing, acceptance of purchasing card Compatibility ? alignment of supplier's management system with company values







Location of Purchases



About half of the survey respondents purchase less than 25 percent of their supplies outside Arizona (Figure 4-7). However, another 25 percent purchase at least half of their supplies outside the state. Of those purchases that are taking place outside the state, only 8 percent of buyers are making more than 25 percent of their purchases from foreign vendors. This is generally a positive result given that domestic competition may be easier to tackle than foreign competition. However, depending on the reasons for non-local purchasing, out-of-Arizona purchasing trends may make it more difficult to connect buyers with local suppliers. For example, for companies where purchasing of some or all products is controlled from an out-of-state location, or where the product is so specialized that only a few national vendors exist, or where a long-standing relationship exists with a particular supplier outside of Arizona, it may be very difficult to change purchasing patterns.







ISO9000 is an international standard designed to provide companies and organizations with a common approach to applying a Quality Management System. AS9100 is the quality system requirements for suppliers to the aerospace industry. CE Mark (short for CE Marking) is a declaration by the supplier that the product meets all appropriate provisions of the relevant legislation implementing certain European Directives. CE marking gives companies easier access into the European market to sell their products without adaptation or rechecking. RoHS Compliance is the European Unions Directive on Restrictions of Hazardous Substance including lead, cadmium, mercury, hexavalent chromium, PBB fire retardant and PBDE fire retardant.



4







3







23







Figure 4-7 Out of State Purchasing



100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0% to 25%







Outside Arizona Outside U.S.







26% to 50%







51% to 75%







76% - 100%







Seventy-four percent of the companies responding to the survey state that they have no "buy local" policy in place. This is a critical point for Arizona's buyer/supplier network especially considering these facts: ? ? ? buyers depend on the Internet to locate potential suppliers geographic proximity is not a key factor in selecting suppliers many Arizona companies are already spending a significant amount of their purchasing dollars outside the state and outside the U.S.







Types of Purchases



Since the survey includes a wide variety of companies, there are an equally wide variety of goods and services being purchased. However, it is generally the case that companies are buying more basic goods locally. These include office supplies and printing; local services such as security, building maintenance and food service; and standard manufactured products and hardware (particularly fabricated metal products) and professional and business services. The types of products being purchased outside Arizona are typically more specialized, although there is some overlap. In some cases, these products may be available in Arizona, but local suppliers are unable to meet other specific buyer criteria.







24







Purchases Not Able To Be Made Locally







Purchases Made Locally







? ?







Large equipment, vehicles, office furniture, computers Electronics and electrical components--parts and production materials for electronics, controllers, inverters, power panels, batteries Technology related to specific contracts (particularly government contracts) Hardware (rollers, handles, latches), valves, solenoids, digital print, locks, die casting magnets Composite components Raw materials, job and production materials with specific requirements Steel and other primary metals Special metal processes, fabricated metals Specialized scientific supplies and equipment Some chemicals and gases Optic lasers







? ? ? ? ?







Office, operating, and shipping supplies, printing Linens, janitorial and cleaning products, landscaping, facility maintenance, security Building and construction materials Vending, coffee and food service Brass and PVC fittings, o-rings, screws, hardware, tools, spouts, fabricated metals, machined components, standard parts Computer equipment and support, electronics, office machines Tooling, heat treating, metal plating, anodizing Professional services (legal, engineering, accounting) IT services Medical and scientific supplies Injection molded plastic parts Fuel, gas and chemicals Equipment repair, HVAC







? ?







? ? ? ? ? ? ?







? ? ? ? ? ? ? ?







According to the survey, the primary reason the products and services that could be purchased in Arizona are not is that companies cannot locate local suppliers (Figure 4-8). While the state cannot impact companies' pricing structures (the number two reason for out-of-state purchasing), there are initiatives and programs that could be put into place to inform local suppliers about buyer issues and help them to become more competitive by helping them understand how to market effectively to local buyers, improve quality standards, or upgrade their production techniques.







25







Figure 4-8 Reasons for Not Purchasing Locally



35% 30% 25% 20% 15% 10% 5% 0% Quality issues Existing relationships Reliability of Delivery Unable to locate local suppliers Price Product support issues Capacity concerns Geographic proximity







In addition to reasons for not purchasing locally, buyers were asked what it would take for them to buy more supplies in Arizona. Availability appeared to be the biggest issue, particularly for specialized supplies and components and particularly outside of the metro areas (Figure 4-9). However, price was ranked only slightly below availability. With the decreasing importance of geographic proximity, Arizona suppliers are competing head to head with non-local suppliers in terms of price. However, quality is often a balancing factor to price.







Figure 4-9 What Would It Take to Buy More Locally?



45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Availability Better prices Quality at competitive prices Capacity & ability to handle complex pdts Regulatory changes







Some of the specific comments made by buyers regarding local purchasing included the following: ? For companies that do a lot of government contract work, most approved subcontractors with the required technologies are not located in Arizona.







26







? ? ?







In order to have a cost advantage, local firms need to have a technological advantage. This requires investing in better equipment to make production more competitive. Labor costs are an issue when competition is global. Better technology can reduce labor's share of production costs. While many U.S. companies support safe work environments and worker benefits, healthcare costs, environmental health and safety requirements are not considered in many other parts of the world where they are competing, making U.S. labor costs dramatically higher.







Other Issues and Comments



Survey participants were asked to voice concerns about other issues that inhibit their ability to compete such as state and local taxes, workforce and regulatory policies. Among web survey respondents, 90 percent responded that none of these issues limit their ability to compete with other firms in their industry that are located outside Arizona. Among the interview participants, only one indicated that there were local policies that limited competitiveness. In this case, the issue involved incentives offered by other states to assist this company in locating facilities.







Other concerns voiced by the survey participants and/or the companies interviewed include the following. Regulatory and Business Environment Affecting Competitiveness -- The majority of the companies responding to the survey cited no regulations or policies that inhibit their ability to be competitive. Among those that included comments, issues are mixed between global competitiveness and local business climate factors. ? ? ? ? ? ? ? ? ? ? Some countries require offsets but [this company is] satisfied with Arizona in this regard. Companies have to compete with companies in other states that offer incentives to locate there. There is a lack of cooperation in Arizona on the local, county and state level. Rather than working in tandem to assist and understand a company, they are competitive with each other. Health care costs and environmental health and safety requirements are not considered in other parts of the world and dramatically increase labor costs in the U.S. Air service is limited outside of metro Phoenix. Land costs are high and water is a limited resource. Rising housing costs in the Phoenix metro area (43 percent increase in the past year) may cause labor costs to rise or cause other locations outside Arizona appear to be a better value. Rising lease rates, particularly in metro Phoenix. Some companies are currently in multi-year leases, but when those leases expire they could be at risk for relocation. Competition with China for materials is causing concerns for high tech companies. State procurement rules, especially for school districts, hinder competitiveness.







Business Expansion --







27







?







Limitations to expand Williams AFB due to surrounding development are hampering opportunities to grow product line (testing impacts neighbors).







Technology, Education, and Workforce -- ? ? Availability of specialized technology is an issue locally. Arizona universities do not grasp "systems engineering concepts" ? understanding the components of a system such as electrical engineering, construction engineering, etc. and the entire system as a whole. There is a tendency to focus on specific engineering disciplines and not the 'architecture' of the entire system. Very happy with the workforce, most of whom are professionals (engineers). Lack of jobs for spouses looking for professional work is a concern (outside metro Phoenix or Tucson). Lack of a large talent pool to draw from is an issue (outside metro Phoenix or Tucson). Schools are under-funded Need technological and cost advantage; recommend technical education in Arizona to enhance technical competence that contributes to higher quality products made here; investment in infrastructure to make production more competitive; reduce labor (costs and employment) through better equipment technology to compete in world market.







? ? ? ? ?







Comparison of Survey Results to Secondary Data Analysis



Much of the data collected in the survey concerns purchasing decisions and barriers to purchasing supplies locally. However, information regarding the types of commodities that are being purchased locally versus those that are not can be compared with the results from the secondary data analysis. Since the primary reason for not purchasing locally is availability, it can be assumed that most of the commodities that represent non-local purchases by survey respondents are supply gaps. However, it is important to keep in mind that due to the low survey response rate, the a non-response bias is likely and this affects the types of commodities that are reported as gaps based on the response rate from each of the different industries of opportunity. ? Electronic components were noted in both the survey and the secondary data analysis. Specific types of components are used in software, telecommunications, high tech instruments, aerospace, other high tech and industrial machinery manufacturing, according to the secondary data. Steel and other primary metals were noted as a supply gap for industrial machinery in both the secondary data and the survey. Specialized scientific supplies were noted as a gap for high tech instruments in both the data and the survey.







? ?







Other gaps noted in the survey that were not apparent from the secondary data included window hardware, solenoids, locks, die casting magnets, office furniture, computers, power panels, batteries, chemicals and gases and optic lasers. Most of these items (with the exception of office furniture and computers) represent highly specialized products that may only be produced by a limited number of companies throughout the country.







28







Alternatively, professional services were noted as a gap for many industries in the secondary data analysis, but not in the survey results. The secondary data indicated supplier gaps in a variety of professional services for almost all the industries of opportunity. These services included advertising, computer systems design, legal services, investment and banking services, accounting, architectural and engineering services, specialized design services and management of companies and enterprises. However, the survey did not validate this finding with a number of firms reporting that professional services are purchased locally. In some cases, the survey responses were not specific enough to match up to particular SICs in the secondary data such as "raw materials", "job and production materials that meet specific requirements", "large equipment" or "technology related to specific contracts", so there may be other items that match up to some of the gaps indicated by the secondary data that cannot be identified. Another important factor to keep in mind in comparing the results is that survey participants were asked to name commodities that "they would like to purchase locally, but are not able to", since this is the relevant question for making future connections between buyers and local suppliers. A listing of items that buyers would like to purchase locally is shown in the "Types of Purchases" section of Chapter 3. However, there may be items that buyers expect to purchase elsewhere or are content to purchase elsewhere that would have come up as gaps in the secondary data but were not validated by the survey.







29







5.0 Models to Connect Buyers and Suppliers



AZBusinessLinc



One of the programs currently being used in Southern Arizona to connect buyers and suppliers is AZBusinessLinc. It has been proposed that this program could be implemented in other parts of the state to improve the supply chain. Although the buyer survey did not reveal a lot of serious red flags, there are certainly improvements that could be made to assist buyers in locating local suppliers and to provide better feedback to suppliers to enable them to compete more effectively with non-local vendors. The following section is a description of how AZBusinessLinc has been implemented by the City of Tucson, and of the advantages of this program. AZBusinessLinc is an on-line supplier database owned by the City of Tucson that allows companies to enter a detailed profile that can be searched by potential buyers. The only criteria are that the companies are located in Arizona and that they are non-retail. The majority of the 2,300 firms currently in the database are located in a five county area in Southern Arizona because this is where the City of Tucson has focused their marketing efforts. Profile information includes general contact information, Disadvantaged Business Enterprise (DBE) certification, a wide range of quality certifications, operational experience, facilities/processes, customer support capabilities, industry type/organization type, sales experience, an open ended statement of capabilities and competitive advantages, a detailed description of products/services offered, and keywords for buyer searches. The profile also includes detailed procurement information that is used by the City of Tucson for internal purposes only. The procurement information provides the city with valuable insights into the companies' purchasing patterns and criteria. This is important because many suppliers are also buyers. The program is currently marketed to buyers through the efforts of a five person staff who meet regularly with local companies to discuss current and anticipated procurement needs. The staff then assists the companies in identifying local suppliers with the desired capabilities. Although companies can search online for suppliers at any time, the assistance of these staff people in finding suppliers is a valuable resource. These staff people maintain long term relationships with buyer companies and help to plan for changes in supplier needs and identify appropriate resources. Although the City of Tucson partners with other cities and organizations such as chambers to raise awareness about the database among buyers and suppliers at local business events, they report that 95 percent of the actual use of AZBusinessLinc is the result of one-on-one relationships developed by staff. Typical buyer industries that use the database are very large companies, although the city is starting to see more medium sized buyers. About 98 percent of buyers are from the private sector. The most appealing features of the database to these companies are that it is very fast and that you can be very specific in the product you are looking for and the criteria you have for selecting a supplier. The system is also kept very current. Although these buyer companies often also maintain in-house supplier databases, they often find that the information is not as current as the AZBusinessLinc database. The access to staff people from the City of Tucson who will do much of the leg work in searching the database and identifying potential suppliers free of charge is also a big selling point. Interestingly, none of the buyer companies







30







were drawn to the database as a means to comply with a buy local policy. If they are buying locally, it is a function of lower transportation costs and just-in-time production requirements. The database is marketed to sellers exclusively through strategic partnerships with other cities, cluster organizations and chambers in the five-county Southern Arizona region. These other cities and organizations have been effective at encouraging local businesses and organization members to include themselves in the database and take advantage of this free marketing tool. The City of Tucson in turn provides information back to their strategic partners as to who has registered and if they are involved in successful deals. Typical sellers are small to medium sized companies with limited in-house marketing capabilities due to their size. They cover a wide range of industries, however, the top industry types in terms of the types of deals that are actually occurring through the database include maintenance repair and operations supplies (MRO), contract manufacturing, and service/support industries such as IT and engineering design. MRO creates far more opportunities than the other two. The City of Tucson did note that a large share of businesses in the database do not receive any opportunities at all. This is primarily due to the poor quality of information that they include in their profiles, particularly keyword choices that would enable them to come up in searches. There are also some companies whose products and services do not match the types of commodities that buyers are currently searching for. In order to keep the database very current, suppliers who have not made updates to their profiles within a fixed period of time are notified that they must verify their information within ten day or they will be dropped from the database. The strategic community partners are also very active in encouraging new businesses to register. The City has worked on over 600 buyer needs over the past three years of which 38 percent have resulted in actual buyer-supplier transactions. However, the failed transactions also provide valuable information to the City that they actively disseminate to local sellers to let them know what problems buyers are experiencing. While price is probably the most common issue, it is by no means the only issue. Production capacity and specific product requirements are also issues. Because of the one-on-one nature of relationships that have been developed with local buyers, AZBusinessLinc has been a valuable retention and expansion tool for the city. However, it has turned out to be equally valuable as a recruitment tool. The City noted that almost every company they have dealt with that is seriously considering a new location in Tucson is interested in the availability of suppliers in the region and this has been a valuable use of the database. Additionally, new companies are frequently interested in the presence of other similar companies in the area because it demonstrates a local labor force and the general ability of that type of company to be successful locally. This information can also be provided through the database. The City is currently in the process of upgrading the database. Enhancements will include required fields in the supplier profiles to improve the quality and completeness of the information; automated notification to suppliers to update/verify their information and automatic notification to suppliers when they are included in a buyer search. Although the profile does not include any sort of SIC or NAICS codes, the City's experience has been that these codes are generally only used by public sector buyers who make up only a very small share of







31







users of the database. They are however considering developing an internal number system for products and services that could be used as a search criterion in addition to key word searches. The City did not look at alternative databases at the time that AZBusinessLinc was developed, but they have since become aware of a number of similar databases. Based on their experience with AZBusinessLinc, they still believe it is superior in terms of the comprehensiveness of information, ease of use and one-on-one relationship based approach to marketing. The City believes that in order for the system to be successful, it needs to be managed and marketed at the local level, given the type of relationship building that is required. It is likely that the system could provide value in other parts of the state in terms of increasing visibility and opportunities for smaller local suppliers. However, the best role for the Department of Commerce would be as an umbrella organization and facilitator to encourage communities and local economic development organizations to buy in to the system.







Connectory



Another similar program used in California is called Connectory. It is generally similar to AZBusinessLinc, but includes some additional features that could enhance AZBusinessLinc if it is expanded for use in other parts of the state. Connectory.com -- the California Network is a business-to-business, buyer-supplier marketing and communication tool that covers the State of California. Connectory.com began in San Diego's East County in the late 1990s and has since expanded throughout the state. Its customers include the companies that profile in and use Connectory.com to find suppliers, each other, potential markets/clients and teaming/alliance partners. In addition, economic development organizations throughout California use Connectory.com as a tool to support a wide range of tasks. Connectory.com is the regional source to find products, technologies, services, company capabilities, capacities and expertise. The following are some of the advantages and additional features offered by Connectory. Many could potentially be incorporated as enhancements to AZBusinessLinc. ? Searching Criteria. In general, the profile information in AZBusinessLinc is more complete. However, Connectory offers some advantages in terms of how the search engine functions. Because Connectory.com searches the entire profile and a company's web site content, it is not limited to specific categories or topics but can use specific phrases or search strings. Searches can be statewide or limited by geography (county, city, zip code -- even street address). Other field specific searches include Company Name, Industry Code, and Certifications. Business Connections Forum. The Connectory web site includes a bulletin board that has "want ads" for buyers needed and suppliers needed, listings of international trade opportunities, employment opportunities, venture funding opportunities and upcoming events. Users of the database can post messages in any of these categories. Success Stories. The web site includes a series of success stories from local businesses that have used Connectory. These stories serve as powerful marketing tools for the service. Sponsorships. Connectory is funded through a variety of public and private sources including sponsorships. Sponsorships range from $5,000 to $30,000 and include banner pages with web site 32







?







? ?







links that appear on the Connectory.com site. The size and placement of banners varies depending on the level of sponsorship. ? Industry and Regional Focus. Starting in mid-2004, Connectory.com began to support regional portals that focus on industry/ technology companies and their suppliers with a specific region. It also launched industry portals that focus on and provide information for specific industries. Once the use of a database such as this reaches sufficient size that users can be segmented by industry and region, these targeted portals can be a valuable added resource to users.







Fast Open Contracts Utilization Services (FOCUS)



Another California program that is specific to government procurement is FOCUS. Fast Open Contracts Utilization Services (FOCUS) is California's only nationwide, local government-to-government purchasing program. It allows cities, counties, schools, special districts and other public entities to acquire technology products and services quickly, easily and at competitive rates. The complexities of the government procurement process were noted as a barrier by survey participants. A program such as this does require vendors to pre-certify. However, once they are part of the program, they are able to circumvent future bidding processes. FOCUS gives local government access to pre-screened, competitively bid vendors in the technology industry, avoiding the expense and delay of a protracted government RFP process. There is no cost to vendors to participate in the program. Most favored public agency pricing is offered by all FOCUS vendors. Public agencies can use the program without going to bid, however each state has its own laws addressing intergovernmental purchasing. It is recommended that prior to implementing such a program statewide that each local jurisdiction's elected body approves the use of the program. FOCUS is the result of five years of work to bring technology choices from multiple sources to public agencies. Originally formed as a result of dire budgetary constraints in the early 1990s, FOCUS emerged as a tool to procure technology goods and services, quickly and from multiple sources. The pool of vendor-partners offers a broad spectrum of information technology products and services to meet a wide range of needs.







33







APPENDIX A







34







FIGURE A-1 NATIONAL SUPPLIERS TO COMPUTER SOFTWARE AND SYSTEMS INTEGRATION INDUSTRIES Reproduction & Publishing 8% 12% 6% 6% 10% 14% 4% 1% 3% 4% 2% 0% 0% 2% 5% 2% 1% 2% 1% 1% 3% 1% 0% 1% 1% 1% 2% 1% 1% 1% 1% 0% 1% 1% 1% 0% 0% 0% 1% 1% 0% 0% 0% $22,634 $87,998 312,566 Info Services Data Processing 7% 11% 11% 5% 4% 0% 3% 5% 1% 1% 2% 3% 3% 2% 1% 2% 2% 2% 2% 3% 1% 1% 4% 1% 2% 3% 1% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% $ 22,246 $ 84,894 5 57,612 Programming & Systems Design 14% 5% 7% 7% 2% 0% 6% 5% 6% 3% 4% 3% 4% 2% 0% 2% 1% 1% 1% 1% 1% 2% 0% 3% 2% 1% 1% 1% 2% 1% 1% 1% 1% 1% 1% 2% 1% 1% 1% 1% 1% 1% 1% $43,8 70 $241 ,241 2,698,1 52







Supplier Industries Employment services Advertising and related services Telecommunications Real estate Wholesale trade Software publishers Office administrative services Computer systems design services Lessors of nonfinancial intangible assets All other electronic component manufacturing Services to buildings and dwellings Automotive repair and maintenance- except car wash Data processing services Monetary authorities and depository credit intermediaries Other support services Colleges, universities and junior colleges Information services Food services and drinking places Postal service Automotive equipment rental and leasing Commercial printing Other computer related services- including facilities Audio and video media reproduction Architectural and engineering services Hotels and motels- including casino hotels Machinery and equipment rental and leasing Legal services Computer storage device manufacturing Management consulting services Securities- commodity contracts- investments Couriers and messengers Management of companies and enterprises Investigation and security services Nondepository credit intermediation Accounting and bookkeeping services Commercial machinery repair and maintenance Water transportation Power generation and supply Air transportation Maintenance and repair of nonresidential buildings General and consumer goods rental Business support services Electronic equipment repair and maintenance Total Commodity Puchases (millions) Total Output (millions) Employment Source: Minnesota IMPLAN Group, 2001 data.







35







FIGURE A-2 NATIONAL SUPPLIERS TO HEALTHCARE AND BIOTECH INDUSTRIES Doctors & Hospitals 1% 3% 5% 15% 2% 1% 4% 5% 4% 2% 0% 2% 3% 1% 3% 2% 0% 1% 1% 0% 0% 2% 1% 2% 2% 1% 1% 1% 1% 0% 1% 0% 0% 1% 1% 1% 0% 1% 0% $41 6,834 $92 3,021 8,75 5,104







Supplier Industries Lessors of nonfinancial intangible assets Pharmaceutical and medicine manufacturing Wholesale trade Real estate Management of companies and enterprises Advertising and related services Legal services Employment services Securities, commodity contracts, investments Plastics products Scientific research and development services Food services and drinking places Management consulting services Other basic organic chemical manufacturing Postal service Telecommunications Paperboard container manufacturing Commercial printing Monetary authorities and depository credit intermediaries All other miscellaneous professional and technical Warehousing and storage Office administrative services Power generation and supply Business support services Services to buildings and dwellings Colleges, universities and junior colleges Accounting and bookkeeping services Insurance carriers Truck transportation Other basic inorganic chemical manufacturing Data processing services Plastics packaging materials- film and sheet Plastics bottle manufacturing Nondepository credit intermediation Surgical and medical instrument manufacturing Natural gas distribution Other miscellaneous chemical product manufacturing Surgical appliance and supplies manufacturing Glass container manufacturing Total Commodity Puchases (millions) Total Output (millions) Employment Source: Minnesota IMPLAN Group, 2001 data.







Pharmaceuticals 20 % 18 % 12 % 0% 9% 5% 1% 0% 0% 2% 3% 0% 0% 2% 0% 1% 2% 1% 1% 2% 2% 0% 1% 0% 0% 1% 1% 0% 1% 1% 1% 1% 1% 1% 0% 1% 1% 0% 1% $57,2 66 $122,9 64 265,6 48







36







FIGURE A-3 NATIONAL SUPPLIERS TO INDUSTRIAL MACHINERY INDUSTRIES Industrial Machinery 14% 6% 4% 4% 3% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% $1 23,197 $2 32,496 1,2 07,369







Supplier Industries Wholesale trade Iron and steel mills Management of companies and enterprises Ferrous metal foundaries Machine shops All other forging and stamping All other electronic component manufacturing Truck transportation Aluminum foundries Lessors of nonfinancial intangible assets AC, refrigeration and forced air heating Motor and generator manufacturing Speed changers and mechanical power transmission equipmen Fabricated structural metal manufacturing Iron and steel forging Motor vehicle parts manufacturing Metal valve manufacturing Turned product and screw, nut and bolt manufacturing Telecommunications Semiconductor machinery manufacturing Plastics products Advertising and related services Monetary authorities and depository credit intermediaries All other miscellaneous professional and technical services Relay and industrial control manufacturing Other engine equipment manufacturing Real estate Other rubber product manufacturing Fluid power pump and motor manufacturing Power generation and supply Fluid power cylinder and actuator manufacturing Aluminum sheet, plate and foil manufacturing Securities, commodity contracts, investments Scientific research and development services Ball and roller bearing manufacturing Copper rolling, drawing and extruding Sheet metal work manufacturing Paperboard container manufacturing Cutting tool and machine tool accessory manufacturing Paint and coating manufacturing Total Commodity Puchases (millions) Total Output (millions) Employment Source: Minnesota IMPLAN Group, 2001 data.







37







FIGURE A-4 NATIONAL SUPPLIERS TO TELECOMMUNICATIONS INDUSTRIES Communication Equipment 1% 28% 14% 12% 10% 2% 2% 1% 4% 0% 3% 1% 0% 1% 1% 0% 1% 0% 0% 0% 1% 1% 1% 0% 1% 1% 1% $46,98 9 $100,00 1 230,92 8 Telecommunication 41% 0% 2% 1% 2% 7% 5% 5% 0% 3% 0% 2% 2% 1% 1% 2% 1% 2% 1% 1% 0% 0% 0% 1% 0% 0% 0% $12 3,424 $35 2,925 1,41 4,321







Supplier Industries Telecommunications Broadcast and wireless communications equipment Lessors of nonfinancial intangible assets All other electronic component manufacturing Wholesale trade Architectural and engineering services Telephone apparatus manufacturing Advertising and related services Semiconductors and related device manufacturing Accounting and bookkeeping services Management of companies and enterprises Real estate Machinery and equipment rental and leasing All other miscellaneous professional and technical Monetary authorities and depository credit intermediaries Household goods repair and maintenance Other communication and energy wire manufacturing Specialized design services Commercial printing Legal services Custom roll forming Sheet metal work manufacturing Plastics products Nondepository credit intermediation Fiber optic cable manufacturing All other forging and stamping Securities, commodity contracts, investments Total Commodity Puchases (millions) Total Output (millions) Employment Source: Minnesota IMPLAN Group, 2001 data.







38







FIGURE A-5 NATIONAL SUPPLIERS TO HIGH TECH INSTRUMENT INDUSTRIES Supplier Industries Wholesale trade All other electronic component manufacturing Management of companies and enterprises Business support services Surgical and medical instrument manufacturing Plastics products Advertising and related services Paperboard container manufacturing Electricity and signal testing instruments Legal services Textile and fabric finishing mills Architectural and engineering services Surgical appliance and supplies manufacturing Scientific research and development services Telecommunications Nonwoven fabric mills Plastics material and resin manufacturing Monetary authorities and depository credit intermediaries All other miscellaneous professional and technical Semiconductors and related device manufacturing Plastics packaging materials- film and sheet Truck transportation Real estate All other forging and stamping Lessors of nonfinancial intangible assets Metal coating and nonprecious engraving Warehousing and storage Broadcast and wireless communications equipment Iron and steel mills Machine shops Specialized design services Power generation and supply Electronic computer manufacturing Sheet metal work manufacturing Securities, commodity contracts, investments Gasket, packing and sealing device manufacturing Total Commodity Puchases (millions) Total Output (millions) Employment Source: Minnesota IMPLAN Group, 2001 data. Instruments 1 4% 7% 6% 4% 3% 2% 2% 2% 2% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% $45 ,044 $105 ,984 555 ,321







39







FIGURE A-6 NATIONAL SUPPLIERS TO FOREST PRODUCTS INDUSTRIES Logging & Forest Pdts 3 1% 1 7% 4% 2 9% 0% 0% 0% 3% 1% 1% 0% 1% 0% 2% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 1% 0% 0% $10,6 13 $22,3 17 142,3 39 W ood Products 6% 16% 14% 0% 0% 19% 5% 2% 1% 1% 2% 1% 0% 0% 1% 3% 0% 2% 1% 2% 0% 1% 1% 2% 0% 1% 1% $5 2,264 $8 6,552 61 7,314 P ap er Products 0% 4% 12% 0% 25% 2% 5% 3% 4% 4% 2% 1% 4% 1% 1% 0% 2% 0% 1% 0% 2% 1% 1% 0% 1% 1% 1% $ 91,396 $1 54,986 5 68,130







Supplier Industries Forest nurseries, forest products and timber tracts Logging Wholesale trade Agriculture and forestry support activities Paper and paperboard mills Sawmills Truck transportation Automotive repair and maintenance Management of companies and enterprises Natural gas distribution Power generation and supply Commercial machinery repair and maintenance Pulp mills Petroleum refineries Monetary authorities and depository credit intermediaries Miscellaneous wood product manufacturing Paperboard container manufacturing Veneer and plywood manufacturing All other miscellaneous professional and technical Cut stock, resawing lumber and planing Other basic organic chemical manufacturing Rail transportation Adhesive manufacturing Reconstituted wood product manufacturing Real estate Plastics material and resin manufacturing All other electronic component manufacturing Total Commodity Puchases (millions) Total Output (millions) Employment Source: Minnesota IMPLAN Group, 2001 data.







40







FIGURE A-7 NATIONAL SUPPLIERS TO ENGINEERING RESEARCH SERVICES Engineering Services 41% 6% 4% 3% 2% 2% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% $ 9,475 $6 0,473 84 2,806







Supplier Industries Guided missile and space vehicle manufacturing Real estate Employment services Glass and glass products- except glass containers Legal services Wholesale trade Commercial printing Telecommunications Office administrative services All other miscellaneous professional and technical Management consulting services Architectural and engineering services Periodical publishers Maintenance and repair of nonresidential buildings Broadcast and wireless communications equipment Computer systems design services Power generation and supply Advertising and related services Services to buildings and dwellings Other basic organic chemical manufacturing Postal service Machinery and equipment rental and leasing Automotive equipment rental and leasing Data processing services Electroplating, anodizing and coloring metal Monetary authorities and depository credit intermediaries Commercial machinery repair and maintenance Total Commodity Puchases (millions) Total Output (millions) Employment Source: Minnesota IMPLAN Group, 2001 data.







41







FIGURE A-8 NATIONAL SUPPLIERS TO TRANSPORTATION AND LOGISTICS SERVICES Rail Transport 2 0% 1% 2 0% 5% 5% 0% 8% 2% 0% 4% 3% 2% 3% 0% 3% 0% 2% 1% 2% 0% 1% 1% 0% 2% 0% 2% 1% 1% 0% $17,957 $37,279 179,852 Truck Transport 8% 21% 1% 9% 9% 12% 0% 3% 5% 0% 1% 1% 1% 3% 0% 2% 1% 2% 0% 2% 1% 1% 2% 0% 1% 0% 0% 0% 1% $9 9,124 $19 8,405 1,62 3,497







Supplier Industries Scenic and sightseeing transportation and support Truck transportation Machinery and equipment rental and leasing Wholesale trade Petroleum refineries Automotive repair and maintenance Railroad rolling stock manufacturing Motor vehicle parts manufacturing Insurance carriers Computer systems design services Other computer related services- including facilities Management consulting services Lessors of nonfinancial intangible assets Warehousing and storage Pump and pumping equipment manufacturing Automotive equipment rental and leasing Accounting and bookkeeping services Real estate Wood preservation Telecommunications Monetary authorities and depository credit intermediaries Advertising and related services Management of companies and enterprises Ferrous metal foundaries Rail transportation Other communications equipment manufacturing Nondepository credit intermediation Other concrete product manufacturing Tire manufacturing Total Commodity Puchases (millions) Total Output (millions) Employment Source: Minnesota IMPLAN Group, 2001 data.







42







FIGURE A-9 NATIONAL SUPPLIERS TO AGRICULTURE, FOOD PROCESSING AND AG TECHNOLOGY INDUSTRIES Food Processing 1 1% 1 4% 0% 3% 1% 0% 0% 0% 3% 0% 3% 5% 0% 0% 0% 0% 3% 3% 3% 0% 1% 2% 1% 1% 3% 0% 2% 1% 1% 0% 2% 2% 0% 0% 1% 0% 1% 0% 0% 1% 2% 1% $ 364,69 4 $ 524,75 1 1 ,8 1 0 , 1 1 5 Farm & Garden Equipment 15% 0% 0% 0% 0% 10% 0% 0% 4% 8% 3% 0% 6% 0% 4% 4% 0% 0% 0% 0% 1% 1% 1% 2% 0% 3% 0% 1% 0% 3% 0% 0% 2% 2% 0% 2% 1% 0% 2% 1% 0% 0% $11,5 89 $20,5 19 82,1 73







Supplier Industries Wholesale trade Cattle ranching and farming Real estate Grain farming Other animal food manufacturing Iron and steel mills All other crop farming Agriculture and forestry support activities Truck transportation Other engine equipment manufacturing Management of companies and enterprises Poultry and egg production Motor vehicle parts manufacturing Petroleum refineries All other forging and stamping Ferrous metal foundaries Animal production- except cattle and poultry Animal slaughtering, except poultry Paperboard container manufacturing Pesticide and other agricultural chemical manufacturing Monetary authorities and depository credit intermediaries Advertising and related services Power generation and supply Plastics plumbing fixtures and all other plastics Lessors of nonfinancial intangible assets Tire manufacturing Oilseed farming Automotive repair and maintenance Insurance carriers Speed changers and mechanical power transmission equipment Soybean processing Metal can, box and other container manufacturing Architectural and engineering services Sheet metal work manufacturing Warehousing and storage Metal valve manufacturing All other miscellaneous professional and technical services Phosphatic fertilizer manufacturing Turned product and screw, nut and bolt manufacturing Natural gas distribution Flavoring syrup and concentrate manufacturing Rail transportation Total Commodity Puchases (millions) Total Output (millions) Employment Source: Minnesota IMPLAN Group, 2001 data.







Agriculture 8% 9% 10 % 7% 10 % 0% 10 % 10 % 2% 0% 0% 1% 0% 4% 0% 0% 1% 0% 0% 3% 1% 0% 2% 0% 0% 0% 1% 1% 2% 0% 1% 0% 0% 0% 1% 0% 0% 2% 0% 0% 0% 1% $1 44,002 $2 27,583 3,0 15,404







43







FIGURE A-10 NATIONAL SUPPLIERS TO AEROSPACE, AVIONICS AND DEFENSE INDUSTRIES Search & Navigation Instruments 13% 15% 10% 7% 0% 0% 0% 5% 3% 0% 2% 0% 2% 3% 1% 1% 1% 1% 1% 2% 2% 1% 1% 1% 1% 1% 1% 0% 1% 1% 1% 1% 1% 0% 1% 1% 0% 1% 1% 1% 1% 0% 1% 1% 0% $1 4 , 4 4 8 $3 5 , 1 0 4 14 7 , 3 9 1 Aircraft and Space Vehicles 9% 3% 4% 4% 9% 7% 7% 1% 2% 5% 2% 4% 1% 0% 1% 1% 1% 1% 1% 0% 0% 1% 1% 0% 1% 1% 1% 2% 0% 0% 1% 0% 1% 1% 0% 0% 1% 0% 0% 0% 0% 1% 0% 0% 1% $6 9 , 4 2 5 $ 13 3 , 6 3 9 50 0 , 3 8 7







Supplier Industries Wholesale trade All other electronic component manufacturing Broadcast and wireless communications equipment Management of companies and enterprises Other aircraft parts and equipment Search, detection and navigation instruments Aircraft engine and engine parts manufacturing Semiconductors and related device manufacturing Architectural and engineering services Guided missile and space vehicle manufacturing Scientific research and development services Propulsion units and parts for space vehicles Monetary authorities and depository credit intermediaries Fiber optic cable manufacturing All other miscellaneous professional and technical services Warehousing and storage Machine shops Plastics products Legal services Custom computer programming services Real estate Power generation and supply All other forging and stamping Other communication and energy wire manufacturing Securities, commodity contracts, investments Telecommunications Data processing services Metal valve manufacturing Electronic computer manufacturing Sheet metal work manufacturing Turned product and screw, nut and bolt manufactur Relay and industrial control manufacturing Nondepository credit intermediation Miscellaneous fabricated metal products Electroplating, anodizing and coloring metal Custom roll forming Aluminum sheet, plate and foil manufacturing Lessors of nonfinancial intangible assets Computer systems design services Wiring device manufacturing Metal coating and nonprecious engraving Iron and steel mills Advertising and related services Electricity and signal testing instruments Ball and roller bearing manufacturing Total Commodity Puchases (millions) Total Output (millions) Employment Source: Minnesota IMPLAN Group, 2001 data.







44







FIGURE A-11 NATIONAL SUPPLIERS TO OTHER HIGH TECH INDUSTRIES Photographic Equipment & Supplies 2 0% 2% 0% 0% 1% 1 1% 8% 3% 0% 0% 1% 4% 0% 3% 1% 0% 1% 1% 2% 1% 1% 2% 2% 3% 1% 0% 0% 3% 1% 0% 1% 2% 0% 2% 1% 0% 1% 1% 0% 0% 1% 0% 0% 0% 1% $ 7 , 13 6 $ 1 5 , 85 9 6 0 , 43 8 Sound Recording & Media Reproduction 1 0% 1% 1 3% 1 5% 1% 0% 2% 2% 1 0% 4% 0% 1% 2% 1% 2% 0% 0% 1% 2% 2% 1% 1% 1% 0% 1% 0% 3% 0% 1% 1% 2% 0% 1% 0% 1% 0% 1% 1% 1% 1% 1% 1% 1% 1% 1% $6,090 $ 1 6 , 89 1 60,160 Architecture and Engineering 0% 0% 1% 0% 10% 0% 0% 1% 0% 5% 0% 0% 4% 0% 2% 6% 0% 1% 0% 0% 1% 0% 0% 0% 1% 0% 0% 0% 0% 1% 0% 0% 2% 0% 0% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% $ 7 4, 9 2 1 $ 1 3 1, 9 4 5 6 8 0, 1 5 8







Supplier Industries Wholesale trade All other electronic component manufacturing Advertising and related services Sound recording industries Architectural and engineering services Photographic film and chemical manufacturing Paper and paperboard mills Management of companies and enterprises Audio and video media reproduction Real estate Broadcast and wireless communications equipment Lessors of nonfinancial intangible assets Employment services Automotive repair and maintenance, except car washes Telecommunications Environmental and other technical consulting services Semiconductors and related device manufacturing Monetary authorities and depository credit intermediation Plastics packaging materials, film and sheet Plastics plumbing fixtures and all other plastics products All other miscellaneous professional and technical services Custom computer programming services Truck transportation Paperboard container manufacturing Power generation and supply Semiconductor machinery manufacturing Magnetic and optical recording media manufacturing Other basic organic chemical manufacturing Scientific research and development services Legal services Plastics material and resin manufacturing Other basic inorganic chemical manufacturing Office administrative services Machine shops Commercial machinery repair and maintenance Computer systems design services Food services and drinking places Securities, commodity contracts, investments Accounting and bookkeeping services Management consulting services Nondepository credit intermediation and related activities Hotels and motels, including casino hotels Postal service Couriers and messengers Maintenance and repair of nonresidential buildings Total Commodity Puchases (millions) Total Output (millions) Employment Source: Minnesota IMPLAN Group, 2001 data.







Electronics 15% 17% 1% 0% 2% 0% 0% 4% 0% 1% 8% 2% 0% 1% 1% 0% 5% 1% 1% 1% 1% 1% 1% 1% 1% 3% 0% 0% 2% 1% 0% 1% 0% 1% 1% 2% 0% 1% 0% 0% 1% 0% 0% 0% 0% $ 39 , 5 8 9 $ 56 , 8 8 5 3 25 , 1 7 6







45







FIGURE A-12 NATIONAL SUPPLIERS TO STATE AND LOCAL GOVERNMENT (NON-EDUCATION) State & Local Government 61% 3% 2% 2% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% $636 ,999 $540 ,280 8,809 ,610







Supplier Industries State & Local Non-Education Real estate Securities, commodity contracts, investments Monetary authorities and depository credit intermediaries Wholesale trade Telecommunications Employment services Legal services Services to buildings and dwellings Food services and drinking places Postal service Hotels and motels Management consulting services Electronic equipment repair and maintenance Accounting and bookkeeping services Other State and local government enterprises Data processing services State and local government electric utilities Investigation and security services Truck transportation Waste management and remediation services Total Commodity Puchases (millions) Total Output (millions) Employment Source: Minnesota IMPLAN Group, 2001 data.







46







APPENDIX B







47







FIGURE B-1 ARIZONA SHARE OF EMPLOYMENT AND OUTPUT COMPUTER SOFTWARE AND SYSTEMS INTEGRATION Arizona Output* $75 9.80 $3 4.68 $72 5.12 $1,0 94.32 $39 1.60 $70 2.71 $2,1 18.54 $1,1 19.09 $82 4.92 $17 4.53 Arizona Employment 4,673 383 4,290 11,389 3,860 7,529 28,609 18,295 8,204 2,110 44,671 National Output* $87,9 98.10 $3,3 80.82 $84,6 17.28 $84,8 93.98 $36,4 99.05 $48,3 94.93 $241,2 41.10 $141,8 12.39 $68,0 00.94 $31,4 27.77 $414,1 33.18 National Employment 312,566 27,570 284,997 557,612 193,743 363,869 2,698,1 52 1,773,1 08 605,037 320,007 3,568,3 30 Arizona Share Output Employment 1% 1% 1% 1% 1% 2% 1% 2% 1% 2% 1% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%







Industry Reproduction & Publishing Software reproducing Software publishers Information Services and Data Processing Information services Data processing services Programming and Systems Design Custom computer programming services Computer systems design services Other computer related services







$3,9 72.66 Total Source: Minnesota IMPLAN Group, 2001 data. *Output in Millions







FIGURE B-2 ARIZONA SHARE OF EMPLOYMENT AND OUTPUT HEALTH CARE AND BIOTECHNOLOGY Arizona Arizona Output* Employment $394 .59 1,091 $394 .59 1,091 $15,106 .31 142,468 $5,732 .14 63,522 $3,273 .24 21,639 $6,100 .93 57,308 $15,500 .90 143,558 National National Output* Employment $12 2,964.38 265,648 $12 2,964.38 265,648 $92 3,020.61 8,755,104 $33 8,367.56 3,739,969 $13 5,953.98 913,003 $44 8,699.06 4,102,132 $1,04 5,984.99 9,020,752 Arizona Share Output Employment 0% 0% 0% 0% 2% 2% 2% 2% 2% 2% 1% 1% 1% 2%







Industry Pharmaceuticals Pharmaceutical and medicine manufacturing Doctors and Hospitals Offices of physicians, dentists, and other providers Other ambulatory health care services Hospitals Total Source: Minnesota IMPLAN Group, 2001 data. *Output in Millions







48







FIGURE B-3 ARIZONA SHARE OF EMPLOYMENT AND OUTPUT INDUSTRIAL MACHINERY Arizona Arizona Output* Employment $7 6 . 37 25 9 $1 3 . 30 99 $ 2 . 05 18 $ 8 . 70 88 $ 10 2 . 81 64 0 $1 0 . 80 74 $ 1 . 02 10 $ 6 . 00 43 $ 7 . 52 76 $ 55 3 . 22 1 , 18 1 $2 2 . 86 92 $7 2 . 99 44 7 $ 8 . 35 56 $ 3 . 99 54 $ 0 . 69 6 $ 2 . 85 21 $ 39 9 . 87 2 , 25 1 $3 5 . 72 36 5 $42.87 484 $1 8 . 93 18 3 $3 6 . 57 53 7 $19.15 163 $29.09 122 $5 1 . 25 12 7 $ 5 . 93 17 $ 2 . 74 20 $ 2 . 23 11 $ 2 . 21 11 $ 0 . 94 3 $ 0 . 00 0 $ 4 . 32 31 $ 0 . 99 5 $ 5 . 43 32 $1 7 . 61 90 $ 0 . 21 1 $ 0 . 19 1 $ 1 . 93 16 $1 0 . 08 47 $ 0 . 11 1 $1 6 . 50 10 1 $ 1 , 59 8 . 39 7 , 77 9 National National Output* Employment $2 0 , 31 5 . 93 7 1, 5 4 5 $ 2 , 07 5 . 18 1 3, 5 5 9 $ 6 , 23 2 . 99 4 7, 2 2 6 $ 1 , 02 2 . 58 9, 1 9 7 $ 3 , 16 2 . 52 1 6, 6 9 4 $ 2 , 59 7 . 79 1 5, 8 3 0 $ 1 , 32 3 . 99 1 0, 8 1 7 $ 3 , 14 0 . 26 1 9, 1 4 8 $ 2 , 65 2 . 39 2 2, 2 9 2 $1 1 , 76 5 . 64 2 2, 3 7 7 $ 8 , 50 9 . 26 3 0, 6 1 1 $1 0 , 79 5 . 33 6 2, 3 3 3 $ 1 , 86 3 . 16 1 2, 3 8 0 $ 1 , 93 6 . 81 1 9, 1 9 8 $ 2 , 02 0 . 78 1 3, 9 8 6 $ 4 , 08 0 . 62 2 2, 4 8 3 $2 4 , 79 2 . 60 1 2 7, 2 99 $ 4 , 80 0 . 48 4 9, 0 2 8 $4,008.91 3 6, 5 7 9 $ 1 , 74 9 . 29 1 5, 9 9 7 $ 7 , 17 9 . 45 9 3, 6 9 1 $4,659.95 3 5, 3 8 0 $3,843.77 1 5, 8 1 8 $1 2 , 04 0 . 36 2 2, 0 8 0 $1 9 , 33 5 . 81 5 0, 4 3 1 $ 5 , 33 8 . 60 3 3, 6 5 5 $ 7 , 27 3 . 75 3 1, 0 2 0 $ 5 , 55 9 . 70 2 3, 9 4 4 $ 1 , 12 7 . 42 3, 7 8 6 $ 2 , 14 6 . 84 9, 7 8 3 $ 6 , 17 9 . 78 3 7, 4 9 3 $ 4 , 44 8 . 20 1 7 ,7 8 1 $ 5 , 04 4 . 44 2 7, 2 0 9 $ 3 , 84 3 . 00 1 7, 3 5 4 $ 3 , 87 6 . 33 1 7, 4 8 9 $ 4 , 16 0 . 68 2 1, 5 6 7 $ 2 , 26 2 . 63 1 6, 3 4 9 $ 3 , 35 5 . 91 1 7, 9 1 6 $ 2 , 52 2 . 61 2 2, 7 9 1 $ 9 , 45 0 . 61 5 3, 2 5 2 $ 2 32 , 49 6 . 29 1, 2 0 7, 3 6 9 Arizona Share Output Employment 0% 0% 1% 1% 0% 0% 1% 1% 3% 4% 0% 0% 0% 0% 0% 0% 0% 0% 5% 5% 0% 0% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 1% 1% 0% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 1% 1%







Industry Construction machinery manufacturing Mining machinery and equipment manufacturing Oil and gas field machinery and equipment Sawmill and woodworking machinery Plastics and rubber industry machinery Paper industry machinery manufacturing Textile machinery manufacturing Printing machinery and equipment manufacturing Food product machinery manufacturing Semiconductor machinery manufacturing All other industrial machinery manufacturing Other commercial and service industry machines Automatic vending, commercial laundry and dryers Air purification equipment manufacturing Industrial and commercial fan and blower man Heating equipment, except warm air furnaces AC, refrigeration, and forced air heating Industrial mold manufacturing Metal cutting machine tool manufacturing Metal forming machine tool manufacturing Special tool, die, jig, and fixture manufacturing Cutting tool and machine tool accessories Rolling mill and other metalworking machinery Turbine and turbine generator set units Other engine equipment manufacturing Speed changers and mechanical power transmissions Pump and pumping equipment manufacturing Air and gas compressor manufacturing Measuring and dispensing pump manufacturing Elevator and moving stairway manufacturing Conveyor and conveying equipment manufacturing Overhead cranes, hoists, and monorail system Industrial truck, trailer, and stacker manufacturing Power-driven hand tool manufacturing Welding and soldering equipment manufacturing Packaging machinery manufacturing Industrial process furnace and oven manufacturing Fluid power cylinder and actuator manufacturing Fluid power pump and motor manufacturing Scales, balances, and miscellaneous general Total Source: Minnesota IMPLAN Group, 2001 data. *Output in Millions







49







FIGURE B-4 ARIZONA SHARE OF EMPLOYMENT AND OUTPUT TELECOMMUNICATIONS Arizona Arizona Output* Employment $566.87 1,523 $142.04 336 $399.26 1,003 $25.58 183 $4 ,519.13 24 ,102 $4 ,519.13 24 ,102 $5 ,086.00 25 ,625 National Output* $1 00,000.5 4 $ 50,426.1 8 $ 44,172.5 0 $5,401.86 $3 52,924.6 9 $3 52,924.6 9 $4 52,925.2 3 National Employment 230,928 96,896 102,140 31,892 1,414,321 1,414,321 1,645,249 Arizona Share Output Employment 1% 1% 0% 0% 1% 1% 0% 1% 1% 2% 1% 2% 1% 2%







Industry Communications Equipment Telephone apparatus manufacturing Broadcast and wireless communications equipment Other communications equipment manufacturing Telecommunications Telecommunications Total Source: Minnesota IMPLAN Group, 2001 data. *Output in Millions







FIGURE B-5 ARIZONA SHARE OF EMPLOYMENT AND OUTPUT HIGH TECH INSTRUMENTS Arizona Arizona Output* Employment $122.86 535 $177.44 1,370 $46.97 479 $277.64 923 $84.98 575 $19.92 84 $8.52 20 $16.06 113 $114.66 670 $362.46 1,916 $12.47 85 $7.75 105 $1,251.72 6,875 National National Output* Employment $13,407.50 52,498 $2,967.90 31,363 $7,249.53 65,610 $4,266.61 16,380 $12,968.98 64,665 $8,138.95 34,103 $4,271.73 11,360 $2,606.67 16,406 $22,838.59 113,874 $20,005.88 95,719 $2,979.68 16,609 $4,282.22 36,735 $105,984.26 555,321 Arizona Share Output Employment 1% 1% 6% 4% 1% 1% 7% 6% 1% 1% 0% 0% 0% 0% 1% 1% 1% 1% 2% 2% 0% 1% 0% 0% 1% 1%







Industry Electromedical apparatus manufacturing Automatic environmental control manufacturing Industrial process variable instruments Totalizing fluid meters and counting devices Electricity and signal testing instruments Analytical laboratory instrument manufacturing Irradiation apparatus manufacturing Laboratory apparatus and furniture manufacturing Surgical and medical instrument manufacturing Surgical appliance and supplies manufacturing Dental equipment and supplies manufacturing Ophthalmic goods manufacturing Total Source: Minnesota IMPLAN Group, 2001 data. *Output in Millions







50







FIGURE B-6 ARIZONA SHARE OF EMPLOYMENT AND OUTPUT FOREST PRODUCTS Arizona Arizona Output* Employment $ 42 . 27 61 8 $ 33 . 15 54 1 $9 . 12 77 $9 74 .95 8 ,45 8 $ 1 8 . 32 10 9 $2 . 38 8 $15.81 73 $0 . 74 6 $2 23 .29 2 ,02 6 $2 07 . 91 1 , 50 3 $ 10 . 52 43 $52.04 790 $ 26 . 10 41 9 $2 88 .06 2 ,37 0 $ 85 . 75 72 9 $ 44 . 03 38 0 $6 49 .25 2 ,68 0 $0 . 0 0 0 $1 29 . 0 9 34 4 $2 25 .46 1 ,05 7 $ 41 . 96 66 $ 16 . 64 52 $ 46 . 73 19 9 $7 . 80 61 $ 22 . 55 12 0 $ 45 . 79 25 4 $ 31 .37 96 $ 26 . 67 15 7 $ 55 . 19 27 5 $1,666.48 11 , 75 6 National National Output* Employment $ 22 , 31 6. 7 4 14 2, 3 39 $ 17 , 36 2. 7 5 13 0, 4 64 $4 ,95 3.9 9 1 1,87 5 $ 86 , 5 5 1 . 5 9 6 1 7 , 3 14 $ 21 , 6 2 9 . 8 1 1 2 2 , 3 68 $4 , 21 3. 3 1 1 3, 44 5 $5,365.75 21,545 $8 , 02 0. 2 3 5 3, 45 2 $6 ,12 9.5 1 5 1,28 6 $ 11 , 11 8. 2 2 7 6, 18 6 $5 , 91 3. 5 1 2 2, 93 6 $4,875.67 6 7, 18 8 $4 , 63 6. 3 5 6 9, 94 9 $7 ,19 2.8 0 5 7,82 0 $3 , 39 9. 2 2 2 6, 58 6 $4 , 05 7. 2 1 3 4, 55 2 $ 1 5 4 , 9 8 5. 8 6 56 8, 1 30 $3 , 2 3 2 . 2 6 7 , 6 23 $ 6 8 , 57 4. 2 3 16 8, 2 2 9 $ 45 , 52 1.3 2 20 8,5 37 $1 , 33 2. 4 1 2, 1 04 $ 80 2. 7 4 2, 5 12 $ 13 , 01 2. 0 1 5 3, 76 9 $3 , 10 2. 2 6 2 5, 38 7 $2 , 54 0. 5 6 1 2, 72 4 $3 , 61 5. 1 6 2 2, 34 7 $1 , 81 5.1 1 6,3 34 $6 , 99 9. 0 6 3 8, 01 0 $4 , 43 8. 7 3 2 0, 55 5 $2 63 , 85 4. 1 9 1 , 32 7, 7 84 Arizona Share Output Employmen