About Arizona

Report published: March 1, 2017

More than 60 interviews with stakeholders and experts throughout Arizona reveal that advanced materials — including carbon fiber, advanced ceramics, and semiconductor materials — show particular promise for economic development in the state. Advanced materials are the foundation for many manufacturing industries and can enable technological innovation, creating middle-income jobs for Arizonans and elevating the state’s companies in the marketplace.

Arizona is well positioned to benefit from rising global demand for advanced materials given its base of 89 companies, leading research universities with materials expertise, and advantageous location and climate for manufacturing. Opportunities to leverage this momentum to further serve growing regional, national, and global markets offer real benefits for the state economy and Arizona residents alike.

However, there are several barriers hindering Arizona’s advanced materials industry and preventing it from reaching its full potential. These barriers to growth range from underfunding for STEM education and workforce training to a lack of technical and financial resources for business development. Arizona must address these roadblocks in order to become a competitive hub for advanced materials.

To take full advantage of these opportunities, state leaders can pursue strategies to create a strong foundation for industry growth and help Arizona businesses grow, innovate, and outcompete regional, national, and global competitors. With forward-thinking policies, Arizona’s advanced materials industry can support nearly 66,000 jobs annually through 2030. These jobs will spark further growth as employees spend their earnings in the local economy.

Summary of Policy Recommendations

The analysis presented in this report culminates in recommendations for Arizona’s leaders based on best practices in the United States and abroad. Each recommendation identifies opportunities to remove barriers and grow the advanced materials sectors. While the recommendations are intended to be complementary and would be more powerful if adopted as a package, each can also be viewed as a stand-alone option.

Value Chain

Organize an Advanced Materials Consortium to Define Industry Needs and Foster Resources for Growth:  Foster public-private collaboration and resource sharing by encouraging Arizona businesses and other stakeholders to organize an industrial consortium, and state universities to host it. Member fees and the universities’ Technology and Research Initiative Fund could help fund administration and operation expenses.

Expand Supply Chain Assistance for Small Businesses to Integrate Advanced Materials in Their Product Lines and Manufacturing Processes: Allow Arizona’s small businesses to tap into the advanced materials market and grow the in-state supply chain by expanding access to capital for factory retooling. The Arizona Commerce Authority could increase state funds to RevAZ and dedicate a portion to a retooling loan fund to support small business growth.

Encourage Foreign Direct Investment to Bolster Arizona’s Advanced Materials Supply Chain: Attract investment from global companies to address supply chain gaps and expand employment opportunities for Arizonans. Foreign direct investment missions could be a natural extension from the activities of the existing state and regional economic development organizations.

Innovation Ecosystem

Provide Materials Testing and Validation Services to Encourage Technical Collaboration between Schools and Industry: Use university-based resources for industry to enable access to capital equipment and technological expertise. Universities could leverage research revenue to match financial support from industry via user fees and privately-owned machinery.

Access to CapitalAccess to Capital

Establish a State Investment Fund to Stimulate the Venture Capital Environment: Bolster Arizona’s venture capital environment and provide critical capital for early-stage ventures and small businesses in the state’s growing high-tech economy with a state-initiated investment fund. The Arizona Commerce Authority could leverage insurance premium tax credits to engage insurance companies in venture capital.

Workforce DevelopmentWorkforce Development

Finance a STEM Immersion Strategic Fund for Targeted K–12 Curriculum Enhancement and Pre-Employment Training: Finance a strategic fund for science, technology, engineering, and math (STEM) education to help prepare Arizona students and educators for Arizona’s growing number of STEM jobs. The state could coordinate private foundations to support this initiative.

Deploy Mobile Manufacturing Labs to Prepare Regional Workforces for Advanced Manufacturing Jobs: Increase regional and local capacity to provide manufacturing education by deploying mobile labs to travel to schools, worksites, and community learning centers in rural, tribal, and other underserved regions. Funding could come from industry partnerships and federal grants for workforce and community development.