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Economy Showing Signs of Improvement

The trucking industry is just one measure of the economy, and local changes in that industry show things are improving in Northern Arizona. North Carolina based Old Dominion Freight Line recently opened a site near the Flagstaff auto park to serve customers in Northern Arizona.

Gerry Mendoza, Old Dominion’s service center manager at the new Flagstaff facility, says the economic indicators are positive. “Most of the customers in our business are manufacturers, wholesalers and retailers, and when their business activity expands, the demand for our services increases. That’s pretty much why we’re moving in there,” Mendoza said.

Along with serving clients in Northern Arizona, having operations in Flagstaff will allow Old Dominion to improve business offerings in several ways. Now, instead of a Phoenix based agent, a company representative will serve people shipping into and out of Flagstaff, improving transit times and bolstering Old Dominion’s presence throughout the southwest, says Mendoza.

This service helps business owners who want to take direct control of shipping costs and deal directly with trucking companies.

Old Dominion’s growth has been substantial, explains Mendoza. “Last year in Arizona, we had months where we grew at 18-20 percent. In January, our Arizona growth was 18 percent over last year. That’s pretty good.”

As the economy works to gain a stronger foothold and demand for trucking services increases, drivers for Old Dominion will be buying fuel and other supplies, contributing to Flagstaff’s tax base.

“For the city, it’s a critical component because sales tax is our primary revenue source,” said Flagstaff City Manager Kevin Burke. “I’m very excited to see those trends running as much as eight percentage points over last year,” he said, describing recent increases in retail sales and automobiles. “Overall, we’re looking at a million dollars more of new sales tax revenues in our FY 14 budget compared to our FY 13 budget so that’s real promising.”

But it’s not all good news, says Burke. “Unfortunately, while we’re seeing really good increases in that revenue, we’re also seeing equal increases in some of our fixed costs. Most prominently, pension costs. “The amount the city contributes to those funds are set by the state and are non-negotiable. Flagstaff also needs to plan for increases in energy costs.

Burke spends a lot of time evaluating the service needs of the community and the costs of running the city’s government. Some of the budget conversations may be contentious, but they are necessary. “We’re really looking at reallocations because our new income is offset by the fixed cost increases. So, in order to put more resources toward items like infrastructure and compensation, we’ve got to take it from somewhere else in the existing budget. So that’s the challenge of this year’s budget,” he added.

At least the trend of increases in city coffers appears solid with new businesses exploring Flagstaff locations and others announcing plans to open doors. Aspen Place at the Sawmill has new tenants. Stephanie Whitlow of RED Development, LLC tells Flagstaff Business News two new retailers will be opening soon. Cultured is a self-serve frozen yogurt and coffeehouse that plans to offer live music and entertainment. Someburros will offer Mexican food made from scratch; Flagstaff will be their sixth location after enjoying years of success in the Valley.

RED Development is continually working to find tenants for existing structures and also for new buildings.

Economists are watching retail trends and other signs of recovery. Last month’s decrease in jobless claims gave some reason for hope, but the question remains as to whether the decline in Americans seeking unemployment is sustained. In Northern Arizona and in communities across the country, many people are looking for signs of growth and meaningful job creation.

In Flagstaff, another positive economic indicator is construction. “We are starting to see a lot more people turning in plans for building,” said Burke, who expects a significant uptick during the upcoming fiscal year, which begins July 1. “And that’s encouraging because that has a very strong ripple effect in the economy and employment,” the city manager added. “More employment means more spending and more spending means more tax revenues.” Burke concedes that it may be a couple of years before some sectors, including construction, return to pre-recession levels, but in the interim, he says, there are positive signs moving forward. FBN

 

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