In a place so starved for “good news,” Arizona greeted the announcement that China’s Suntech would locate its first U.S. manufacturing plant, growing to 250 jobs, in metro Phoenix as if it had won a Boeing jetliner assembly line. “This is a great day for Arizona,” enthused Gov. Jan Brewer. “I’ve been so determined that we have a business climate that will bring us jobs.”
It’s important to note that this “business climate” is a complete repudiation of the ideology of Arizona’s Kookocracy. Suntech will benefit from tax incentives and was pursued aggressively, a strategy that has worked well for Southern states. This had been dismissed in the past by legislative leaders and other ruling mandarins who argued that all Arizona needed was more tax cuts, less regulation and sunshine to become the Hong Kong of the desert.
Suntech was also roped in by the solar and sustainability research at Arizona State University, some long-standing but much ramped up under Michael Crow. The Kookocracy has consistently cut university funding and scoffed at research. Finally, it represented a reaching out to the world economy by a place that was historically inward looking, just waiting for the next wave of house-buyers from the Midwest. This, too, while pushed by Barry Broome of the Greater Phoenix Economic Council, had received little traction among the local economic elites for years.
So, good for Phoenix. With one of the worst and least diverse major metro economies in the nation, any boost will help. If the lessons from the Suntech deal are learned and expanded upon, who knows what might happen. Yet, not to sun on their parade, the deal also raises some troubling questions.
Joining the world economy means learning its unpleasant realities. Suntech is hungry to become a market leader in America, and manufacturing in Arizona will allow it to place a “made in USA” label on its photovoltaic panels. A smart move politically, and, as the New York Times noted, it could allow Suntech to go for contracts to fit federal buildings with solar panels that require made-in-America standards. Indeed, the company intends to apply for a 30-percent investment tax credit available through the stimulus for renewable energy manufacturing in the U.S. The Arizona operation will actually assemble panels from Chinese-made solar cells. This geopolitical calculus led Suntech to the U.S. and Arizona.
With China rapidly moving to become the world’s second largest economy, America faces challenges it has never before encountered. China is not playing by the rules in trade. It is rapidly investing in infrastructure for the 21st century, including bullet trains. Its stimulus also went to build up even more of its productive base. And unlike America, China understands the future will include substantially higher energy costs. It has declared renewable energy a strategic asset, which it will use protectionism to advance, even as it does deals worldwide to lock up oil reserves. None of this bodes well for Americans, who have seen their wages stagnate and face the worst unemployment situation since the Great Depression.
This is the troubled water in which Arizona is swimming, better late than never. It’s fair to ask if this will become the next Google office (remember that celebration?) or TGen, the former gone, the latter at best being kept from its potential by the failure to rapidly build out the Phoenix biomedical campus. Will it and the whole solar fad turn out like the vaunted “cluster strategy” implemented after the 1990 real estate crash? I.e., a failure. GPEC was founded with the dynamic Ioanna Morfessis as its president and for a few years had great success in building the economy, before the Growth Machine torpor set in and the gains stopped.
The Suntech coup will only work if its lessons are absorbed and widely applied, including to the small but promising array of American solar companies already in Phoenix. Arizona got out and competed. It had abundant, relatively low-cost labor. It was close to the big market of California. But the future lies in capitalizing on solar research and development, as well as tech transfer to a vibrant entrepreneurial sector. That’s where the high-wage jobs are. So bolstering ASU and other university efforts, as well as Science Foundation Arizona, is vital. So, too, is a strategy to move out of the basement of startup and venture capital attraction. Phoenix will have to make big strides in infrastructure and improving K-12 education. The danger from this fix of good news is a regression to the prevailing “everything’s fine” drugged mindset, that this one small advance shows Arizona can sit passively in a rapidly changing world.
Jon Talton is a journalist and author living in Seattle. He writes the “On the Economy” column for the Seattle Times and is editor and publisher of the blog Rogue Columnist (www.roguecolumnist.com).