Despite a down economy, many Flagstaff businesses are thriving.
Area businesses seeing growth are in three main sectors, according to the city’s Office of Economic Development. Those areas are consumer product manufacturing, medical products/medical research and electrical and electromechanical manufacturing. Healthcare providers are also seeing an increase.
“Our manufacturing sector tends to be much more recession-proof than other types of businesses because they create products that are always needed,” said Julie Pastrick, president/CEO of the Flagstaff Chamber of Commerce. “For example, W.L. Gore manufactures medical and dental products and its ever popular GoreTex fabric; Nestle Purina’s pet food is always in demand; Joy Cone operates one of three ice cream manufacturing plants in the U.S. right here in Flagstaff, and SCA Tissue creates paper products that we all rely on,” said Pastrick, whose organization represents 28,000 employers and 1,050 members. “Flagstaff has benefitted from having these types of manufacturers located here compared to other communities, like Yuma, that have had the construction industry dominate its landscape, which resulted in a huge downturn in its economy and a high rate of unemployment.”
In the medical products and research field, W.L. Gore and the Flagstaff branch of Translational Genomics Research Institute (also known as TGen North) are both thriving, despite the recession.
“As a maker of medical products, the aging population and innovation continues to drive [Gore’s] market. Impact on their growth may occur as a result of the new healthcare legislation that will be phased in over the next several years, but it will remain to be seen,” says Kurt Haskell, business retention & expansion manager with the City of Flagstaff’s Economic Development office.
TGen North has seen phenomenal growth, even above its own projections. According to David Engelthaler, TGen North’s director of programs and operations, it has tripled its revenue, putting it at about $4.5 million per year. It has also expanded from four employees to 28, even though internal estimates predicted 15-20 employees by now. The company is also expanding space – from 4,500 square feet to 10,000 later this year. Additionally, TGen North now has a spin-off company, PathoGene, LLC.
“Of course, the down economy affects our world as well, it means more competition going after fewer grants and contracts,” said Engelthaler. “However, our success is like anybody else’s – you get good by being good. We are very good at what we do [pathogen genomic research] and are very competitive in the grant world. Here in Flagstaff, we’re led by Dr. Paul Keim, who is a world-renowned and highly respected researcher in this field. As such, we are setting the pace in many areas and I think it makes us a lot more fundable.”
Engelthaler says TGen looks to share its success with the community at large.
“I think we all have a responsibility to help everyone get through this recession. We make a conscious effort to purchase and hire services locally, as much as we can. We pretty much all work, live, and play here, so we hope that any effect from our growth will have at least a small impact on the community,” he said.
“The third sector that has expanded is electrical and electromechanical manufacturing. The one company driving this is Motor Excellence, which has a high efficiency electric motor that may become a ‘disruptive technology’ in the electric motor market,” said Haskell.
Similarly, some small businesses in town are experiencing significant growth. One such business is Fizz Bath Shop, which makes and sells natural bath products downtown. They opened their first shop in 2009 and moved to a new location in 2010.
“Our profits for the last quarter of 2010 were up 315 percent over the same period the year before,” said Kim Yuhl, Fizz Bath Shop owner, adding that they are about to hire new employees for the busy summer season and even considering opening a second location.
“When starting our store in 2009, everyone thought we were crazy. I was confident we would do well… [but] I did not, however, think we would be doing as well as we are. We had high expectations but our numbers are exceeding them. I would consider our products a luxury – nobody needs a bath fizz, but people want to treat themselves and their friends to bit of luxury.”
All of these success stories are good news for Flagstaff as a whole, too.
“If one looks at Flagstaff’s employment base, the companies expanding are the area’s larger (private sector) employers. As a result, employment in Flagstaff has held its own, with our MSA [metropolitan statistical area] having one of the lowest unemployment rates in Arizona and also comparing favorably to the national picture,” said Haskell.
Looking at the nation, Nicole Wolfgang, senior analyst at Sageworks Inc., a provider of analysis applications and financial trend data for privately held companies, says healthcare, education (particularly technical and trade schools), and information technologies represent the fastest growing industries today.
“Healthcare and technology industries have also posted positive historical growth, while education has stepped up the pace over growing demand in an uncertain economy. We expect that to be the norm for a while, since evolving technologies requiring education and additional skills are becoming more and more requisite for employment in every field,” said Wolfgang.
Indeed, Flagstaff businesses, overall, are positive about 2011.
Flagstaff Chamber President/CEO Julie Pastrick said, “During 2010, the Flagstaff Chamber surveyed its member businesses and reports were that [many] were flat or projecting an uptick in sales and revenue. The generalized statement was cautious optimism, but all in all, many businesses were feeling like the worst was behind them and they were beginning to feel positive about their pace of success in the year ahead.” FBN
Written by Angele Sionna
