$12.5M for TREO brings in mixed bag

It's unclear if public's investment in development agency is really paying off
2013-02-03T00:00:00Z 2014-07-08T11:19:39Z $12.5M for TREO brings in mixed bagBecky Pallack Arizona Daily Star Arizona Daily Star
February 03, 2013 12:00 am  • 

Tucson's economic-development agency has been on a roll over the past six months, helping attract six companies promising more than 1,800 new jobs to the region.

But it could be years before we know if the jobs actually materialize, and whether taxpayers got their money's worth from the $12.5 million in public funding directed to the agency since it opened in 2005.

Since Tucson Regional Economic Opportunities was created, the agency says, it has helped attract 60 new employers to the Tucson area, including 18 companies with potential to bring more than 200 jobs each.

Half of those big catches are too new to assess. Of the nine companies recruited long enough ago to have a track record, three have already packed up and left town, and a fourth brought a fraction of the expected jobs. But five outperformed expectations of jobs created and more than made up for the others' losses.

Still, that good news comes with a caveat. Three of the top performers are call centers, and the average annual wage for Tucson-area telemarketers is $29,342, about 31 percent lower than the overall Tucson-area average wage.

Before the recession, TREO was turning away interested call centers, because adding a new one to Tucson's economy would have meant poaching workers from the existing call centers, said TREO Vice President David Welsh.

The recession changed that dynamic.

"When you have 10 percent unemployment, you're focused on creating jobs, period," said TREO CEO Joe Snell.

Focus on wages

While TREO says it's helped create about 10,000 jobs since 2005, the recession took away 10,000 jobs.

Now that the economy is improving, TREO plans to focus more on target industries, Snell said.

He said Tucson has outpaced the nation in job growth, but not in wages, which is where the agency now wants to focus its efforts. The target industries pay at or above the national average, he said.

But that doesn't mean TREO will write off call center jobs, because Tucson needs jobs for people of all skill sets, he said.

At one time, five area governments - Tucson, Pima County, Oro Valley, Marana and Sahuarita - kicked in money for TREO. But over the years, except for Pima County, all of them have backed away, questioning whether TREO is the most efficient use of limited economic-development funds.

TREO's new $450,000 contract with the county is tied to its ability to create 1,500 new jobs in the region. It averages about 1,200 a year.

The performance measures also require that about 40 percent of new jobs be in target industries: aerospace and defense, biosciences, solar and logistics.

In the past six months, TREO has attracted a biotech company, a tire distribution center and two factories, and it has helped a call center and another factory expand here.

"It's shaping up to be our strongest year in many years," Snell said.

About 76 percent of the 1,800 jobs the new companies are forecast to bring to Tucson are in the targeted industries, said TREO Vice President Laura Shaw. But she cautioned the companies will gear up over time, and job projections are over three to five years.

TREO has seen interest from bioscience companies triple in the past year, she said, and the agency will launch a new bioscience business development strategy this spring.

TREO's performance, year by year

2005-06

• Hits: Arizona Canning factory, one of TREO's first recruits, has stayed in Tucson.

• Misses: Pella window factory became a victim of the housing bust.

• Projected jobs from all TREO-recruited companies: 860.

• Estimated jobs today for those companies: 145.

• Total public money: $2.5 million.

• Public money per job promised: $2,907.

2006-07

• Hits: Geico call center and Caid Industries factory doubled their projected job numbers.

• Misses: United Collection Bureau call center is gone.

• Projected jobs from all TREO-recruited companies: 2,012.

• Estimated jobs today for those companies: 1,771.

• Total public money: $2.7 million.

• Public money per job promised: $1,328.

2007-08

• Hits: Afni call center grew more than six times the expected jobs. Three smaller solar companies gave Tucson a toehold in the solar tech trend. One of them, Schletter Inc., has upped its employment from 15 promised jobs to 140 current employees.

• Misses: Timken aerospace center left for Mesa.

• Projected jobs from all TREO-recruited companies: 986 new, 1,833 retained.

• Estimated jobs today for those companies: 4,057.

• Total public money: $2.9 million.

• Public money per job promised: $1,035.

2008-09

• Hits: Ventana Medical Systems expansion led to big job gains, Cyracom language translation call center has 60 percent more jobs than expected.

• Misses: 3S Swiss Solar Systems is gone.

• Projected jobs from all TREO-recruited companies: 761.

• Estimated jobs today for those companies: 1,501.

• Total public money: $1.6 million.

• Public money per job promised: $2,082.

2009-10

• Hits: American Red Cross expanded operations here.

• Misses: Sargent Aerospace/Sargent Controls shrunk its workforce.

• Projected jobs from all TREO-recruited companies: 383 new, 425 retained.

• Estimated jobs today for those companies: 932.

• Total public money: $900,000.

• Public money per job promised: $966.

2010-11

• Hits: SunEdison added to the solar stockpile.

• Misses: SunEdison, because just two of the jobs were permanent. The other more than 250 were temporary construction.

• Projected jobs from all TREO-recruited companies: 685.

• Estimated jobs today for those companies: 1,361.

• Total public money: $968,000.

• Public money per job promised: $1,413.

2011-12

• Hits: Recruited C3/CustomerContactChannels call center, OptumRx office, Bruker Nano optics firm, Graybar Electric Co.

• Misses: None so far.

• Projected jobs from all TREO-recruited companies: 2,207 new, 345 retained.

• Estimated jobs today for those companies: Too early to say.

• Total public money: $596,000.

• Public money per job promised: $234.

2012-13 year to date

• Hits: Recruited Aris Integration headquarters and factory, Accelerate Diagnostics headquarters and labs, B/E Aerospace factory expansion, Integrated Technologies Group factory.

• Misses: None so far.

• Projected jobs from all TREO-recruited companies: 1,839 so far.

• Estimated jobs today for those companies: Too early to tell.

• Total public money: $450,000.

• Public money per job promised: $245 so far.

*TREO has helped some companies more than once. In those cases, job totals may be listed in more than one year.

On StarNet

Find a searchable list of companies recruited to the Tucson area by TREO at azstarnet.com

Find an interactive list of Southern Arizona's largest employers at dynamic.azstarnet.com/star200

Contact reporter Becky Pallack at bpallack@azstarnet.com or 573-4346. On Twitter @BeckyPallack

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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