Tucson’s Good, Bad and Ugly Economy
According to a report on KOLD News in Tucson, Pima County supervisors discussed their regional economic plan on Sept. 8, focusing on ways to increase job growth, prosperity and affordability in metro Tucson. Tucson Mayor Regina Romero also spoke at the meeting about the joint prosperity initiative between the city and county.
Let’s look at the good, the bad and the ugly of the plan and Tucson’s economy.
The Good
It’s good that the top politicians recognize that the Tucson economy is in need of considerable improvement, especially considering that the city has a poverty rate six to eight percentage points above the national average, depending on how the politicized subject of poverty is measured.
Some outlying areas of metro Tucson, including the municipalities of Oro Valley (population 47,595) and Marana (65,523), have a higher median household income than the city but lag their peers in other parts of the Southwest and the Sunbelt overall.
These two suburban towns are small relative to suburban towns in metro Phoenix but are large for the Tucson metropolis. The two have a combined population that is about 21% of the population of the city of Tucson. They are also growing faster than the city. As such, they should be part of any discussions about the metro economy, but, strangely, were not mentioned in the news report as participating in the Sept. 8 meeting.
It’s good that Tucson is the economic center, university center, cultural center, healthcare center, and transportation center of Southeastern Arizona. It’s not good, however, that Southeastern Arizona has serious cultural, demographic and geographic handicaps that keep it from being an economic dynamo.
The Bad
Southeastern Arizona is largely a barren, water-starved expanse (Pima County alone is 9,000 square miles). The expanse suffers from the legacy of the Spanish Empire and then Mexico—that is, a legacy of an extraction economy instead of an innovation and production economy, a legacy of a one-party government, and a legacy of a two-class society of aristocrats at the top and peasants at the bottom.
The legacy is evidenced in metro Tucson by the fact that a political monopoly (Democrat) has run the city and county for decades. Naturally, neither the Pima County supervisors nor the Tucson mayor will acknowledge that this lack of political diversity stifles innovation, prosperity and accountability.
Another negative is that a whopping 36% of metro Tucson is unincorporated county. This means that a large swath of suburbia, including the wealthy Foothills and fast-growing Vail, does not have its own municipal government to provide city-level services and amenities. Instead, the 36% has to rely on a government that has 9,000 square miles under its jurisdiction, including locations where lizards and cattle are the main residents. Even if the country supervisors were geniuses and had the wisdom of Solomon, it would be impossible for them to be close enough to residents to understand the widely different needs of suburbanites, ranchers and lizards.
The supervisors said that they want to focus development on the following seven sectors.
- Aerospace and Defense
- Manufacturing
- Health & Health Innovation
- Transportation, Distribution & Logistics
- Advanced and Emerging Technology
- Tourism
- Clean & Renewable Energy
The wish-list sounds platitudinal and, curiously, does not include mining, although the mining industry has long been economically significant in the county and region, despite flat employment growth recently. Prospects are favorable for the industry, because copper and other minerals are key for the clean and renewable energy that the supervisors want.
A few years ago, city leaders were ecstatic about the Caterpillar Company establishing an office downtown that employed a couple hundred people. No doubt, Caterpillar wanted to be close to its mining customers. Now, the industry doesn’t make the list.
Supervisor Matt Heinz is quoted in the story as saying, “Our goal is to get us to a place where we’re getting that kind of critical mass in, say, advanced manufacturing just like we already have in defense and aerospace, and then those are already, we know, very well-paying jobs and not going anywhere.”
With regard to defense and aerospace, Heinz was presumably referring to Davis-Monthan Air Force Base and to Raytheon, the division of RTX that makes missiles in Tucson. The base has roughly 15,000 civilian and military personnel, down considerably from its peak. Raytheon is growing and has roughly 12,000 employees in Tucson, many of whom are engineers.
Both organizations are in Tucson by accidents of history and geography and not by anything extraordinary that the city did to bring them here. The Air Force wanted a relatively unpopulated area with good weather for flying. The predecessor to Raytheon, Hughes Aircraft, wanted a place away from the coast that was less vulnerable to enemy attack.
Raytheon has a very technical operation and is staffed by very smart people, including four members of my extended family. But it’s a stretch to refer to the business as advanced manufacturing. It’s essentially an assembly operation, albeit a highly complex one, that isn’t conducive to robotics and automation. Many of the missile components are made at other company locations in other cities or by suppliers across the country.
This doesn’t give Tucson a critical mass in defense and aerospace. But it does raise an important question: Why hasn’t the long presence of Raytheon in Tucson led to spinoffs that would give the city such a critical mass? After all, there are other cities that have a critical mass in this industry.
Take Huntsville, Alabama, a city where a former employer of mine had a circuit board plant. It’s also where I held a business reception at NASA’s Space Flight Center. Some of Werner von Braun’s former associates were still alive and attended the reception.
In addition to having a critical mass in defense and aerospace, Huntsville is also growing in information technology, bioscience and advanced manufacturing. Despite 30% of its population being African American and thus set back by the legacy of slavery and Jim Crow, its poverty rate is roughly six percentage points lower than Tucson’s. Moreover, 47.2% of Huntsville adults have a bachelor’s degree or higher, versus 31.1% of Tucson adults.
Defense and aerospace startups and venture capital seem to be skipping over Tucson. For example, RTX has entered into a $50 million agreement with the Denver-based startup Xcimer Energy to develop pulsed laser weapons to shoot down drones and missiles. Another example: GE Aerospace is buying Cleveland-based Consolidated Precision Products for $11.75 billion.
According to a Sept. 11 story in the Wall Street Journal, Florida is becoming a magnet for defense and aerospace businesses and venture capital. Examples: Venture-capital giant Andreessen Horowitz has established a regional office in West Palm Beach, Fla., after raising $1.18 billion to invest in startups specializing in technologies for national security. Palantir is expanding its defense business and has recently relocated its global headquarters to Miami. Space Eyes, a geospatial and counter-drone technology startup, is based in South Florida. Satellite manufacturer Terran Orbital also started and grew in South Florida prior to being purchased by Lockheed Martin in 2024.
In all, Florida’s defense industry has an economic impact of $102.6 billion and supports more than 865,000 jobs, according to the Florida Defense Industry Economic Impact Analysis.
Pima County supervisors should get out more and visit such places.
Maybe the local culture has something to do with Tucson not reaching a critical mass in defense and aerospace. An example of the culture is how Tucson reacted recently to Raytheon being awarded a $22.9 billion contract by the federal government to produce more Tomahawk missiles. Demonstrators stood outside a gate to the facility, accusing the company of war crimes. Also, local media ran a story featuring the leader of a tiny ragtag group who accused the company of using Tomahawk missiles to commit genocide in Gaza. Actually, Tomahawks are longer-range missiles fired from ships and were not used in the ground war in Gaza.
There’s not enough space to address the other six sectors targeted by the supervisors, but there is space to talk about the tourism sector.
Tucson should play the hand it was dealt and make the most of the desert climate and scenery that many tourists find attractive. But it shouldn’t delude itself into believing that it is some sort of tourist nirvana that will lead to riches.
Just about every city has a tourism bureau that tries to attract visitors. Competition is fierce and includes such cities as Las Vegas, Orlando and New York. Even my boyhood hometown of St. Louis, an old industrial city with a bad reputation, attracts as many tourists as Tucson, due to such attractions as the Gateway Arch and museum, gorgeous Forest Park and its museums and world-class zoo, the St. Louis Cardinals baseball team, and the Missouri Botanical Gardens, which, in a recent article, was ranked fourth-best in the country.
The problem with the tourism industry is that it tends to be low-wage and seasonal. The St. Louis region compensates for this downside by having a highly diversified economy, including aerospace (Boeing), electronics (Emerson), bioscience (Monsanto), finance (Edward Jones), healthcare (Centene and BJC Healthcare), beverage (Anheuser-Busch), car rental (Enterprise), technology (World Wide Technology), pet care (Nestle-Purina Pet Care), agribusiness (Bunge), defense technology (National Geospatial-Intelligence Agency), and two medical schools (Washington University and St. Louis University).
Some of the above are not household names but are large organizations. For example, World Wide Technology has about $20 billion in revenue, and Bunge, about $53 billion.
Pima County supervisors should get out more and visit such places.
Closer to Tucson, metro Phoenix has also compensated for the seasonality of tourism and the burning hot summers of the Valley of the Sun. Once highly dependent on tourism, the metropolis has broadened its economy into other sectors, especially semiconductors, where over $100 billion has been invested in the last couple of years.
Even the suburban city of Peoria, which had been a rundown, shabby backwater for decades, has become part of the critical mass, or cluster, of the semiconductor industry. For example, Amkor is partnering with NVIDIA to expand its operation in Peoria. The semiconductor packaging and test company is planning to add 60,000 square meters of cleanroom space, bringing the total cleanroom capacity to 93,000 square meters. When built out, the 170-acre campus will have a workforce of 3,500 employees.
Scottsdale is still a tourist mecca, as can be seen it its annual Waste Management golf tournament, which draws over 600,000 fans. But the city has broadened its appeal to become a center for corporate offices and headquarters. Coincidentally, as I was writing this commentary, an article appeared in my in-box from AZ Big Media, describing how Scottsdale reinvented itself and became a dynamic city. It began 75 years ago when the city was incorporated.
Note to Pima County supervisors: Incorporation was key.
The article doesn’t mention this, but Scottsdale was established with nonpartisan elections.
Metro Phoenix didn’t overlook the tourism industry as its economy diversified. For example, to reduce seasonality and compensate for the heat of summer, Phoenix and Glendale have air-conditioned stadiums.
The once-impoverished Salt River-Pima Indian Community has also become a year-round tourist mecca.
Running along the eastern border of Scottsdale, the community has a large office complex of Class A buildings, has the spring-training facility of the Arizona Diamondbacks (a facility that used to be in Tucson), has a resort/casino, has a golf course, and has huge indoor tourist attractions, including an aquarium, a butterfly exhibit, and, coming soon, a rain forest—all connected by a pretty promenade of shops and restaurants.
It’s debatable whether a rain forest should be built in the desert, but it’s hard to deny that the facility is impressive. Photos can be seen here.
Metro Phoenix wasn’t always so prosperous. Seventy-five years ago, it resembled Tucson, not only economically but also aesthetically.
That brings us to “The Ugly” and the final lesson for the Pima County supervisors and the mayor of Tucson.
The Ugly
Generally, a city that looks crummy will have a crummy economy. There are exceptions, but they tend to be cities that have great natural advantages, such as being in the middle of a populous area, being on a navigable river, being a port city on the coast or the Great Lakes, or being at railroad and/or interstate highway junctions. Due to their natural advantages, they can be prosperous while also being gritty, smelly hubs of wharfs, foundries, refineries and paper plants.
There’s no way to say this nicely, but my adopted hometown of Tucson doesn’t look so good, especially for a Sunbelt metropolis that wants to grow its tourism sector and become a magnet for the high-wage sectors targeted by the county supervisors.
Downtown has been redeveloped through a tax scheme, and the nearby campus of the University of Arizona and some surrounding neighborhoods appear prosperous, albeit less so in the summer. But those few square miles account for less than 2% of the city of Tucson’s 230 square miles. Sadly, much of the remaining 98% is seedy and shabby, including areas that visitors pass through on the way to and from the airport.
Even wealthier areas send a message that something is wrong with local government, especially those that are unincorporated and thus at the mercy of the 9,000 square-mile Pima County. In the Foothills, for example, the landscaping along major roads and in front of commercial properties appears to be better suited to lizards and javelina than people.
Weeds and litter proliferate, tacky illegal signs are ubiquitous, pavement is poorly maintained and rarely swept, sidewalks are as rare as penguins in the desert, large car parts from accidents are left on the roadside, warning signs and pylons are left behind in the weeds on the rare occasions when road work is done, and medians and rights of way are bare dirt instead of attractive arrangements of riprap, crushed granite, accent boulders, and desert plants and trees.
The nearby Catalina Mountains are pretty, but they make the conditions look worse by comparison.
In Conclusion
The economic fantasies of the Pima County supervisors and the mayor of Tucson won’t be realized until they end their monopoly, support the incorporation of the 36% of the metropolis that isn’t incorporated, adopt higher maintenance standards, make aesthetics and code enforcement higher priorities, and stop being hubristic and parochial.
-Craig Cantoni
Mr. Cantoni is a freelance writer, activist and retired business executive.
