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President's Message 
Another Successful Year for TREO
July 1 officially marked the beginning of TREO's third year of operations. As we look ahead to another exciting year it's important to reflect on our successes and establish goals for the coming year. Before reviewing our accomplishments, I'd like to take the opportunity to thank all our investors for their support of economic development in the Tucson region. Your support, in addition your guidance and leadership in the community are directly responsible for the success of TREO. We are already getting to work on another busy year and we hope you will continue to be involved in the region's success.
Your investment truly does make a difference in the state of economic development in Southern Arizona. As you will read below, Expansion Management magazine recently ranked the Tucson MSA #1 in the country for business recruitment and attraction.
I'd like to remind you of some of our accomplishments since TREO's inception in July 2005:
Assisted in the attraction and expansion of 12 major employers in the region resulting in 3,122 new direct jobs and $219.1 million in capital investment, and filling more than 2.3 million square feet of industrial space:
• Target (May 2007)
• LifeCycle Logistics (March 2007)
• Global Investment Recovery, Inc. (Feb. 2007)
• T.A. Caid Industries Inc. (Feb. 2007)
• Computer Designs, Inc. (Jan. 2007)
• Global Solar Inc. (Nov. 2006)
• United Collections Bureau, Inc. (Sept. 2006)
• Geico (Sept. 2006)
• Arizona Canning Company (June 2006)
• Glass Fiber, Inc. (May 2006)
• Macsteel Service Centers USA (April 2006)
• Pella Corporation (Oct. 2005)
Responded with assistance, advice and/or service to 865 business inquiries.
Assisted 60 local businesses in applying for Arizona Job Training Grants which resulted in awards totaling $5.6 million (3,276 employees trained).
Developed and launched a Business Resources Hotline (520.243.1905) to offer a coordinated rapid response to local companies.
Successfully launched the Economic Blueprint, a guiding vision and plan for the future of the Tucson region that identified key industries which will shape the future economy and deliver the highest economic returns.
Launched a program designed to spot businesses that are at risk of leaving the region and remove obstacles to growth. TREO representatives and local partners conducted 420 Business Outreach visits with local firms.
Developed marketing materials designed to promote the Southern Arizona region.
Launched a strong TREO Web/Online presence.
As TREO moves into its third year of operation, it now has an Economic Blueprint foundation and framework to focus its efforts for years to come. The Economic Blueprint identifies five major focus areas -- The Power of Five -- designed to boldly secure and shape this region's destiny. Much of TREO's work in the coming year will include efforts focused on achieving implementation of the Power of Five Goals and Strategies.
To close, I would like to share with you some positive data regarding economic development efforts in the Tucson region:
Between 1993-2004, 74% of business attractions in the Tucson region were in the teleservices industry. The remaining 26% of business attractions were split by small percentages in industries like aerospace, optics, manufacturing, software/IT, plastics, etc.
TREO now reports that in the last two years, 66% of business recruitment came from the manufacturing industry, and the remaining 35% from teleservices. Many in the Tucson community assume that "call centers" are the dominant business industry attraction, however these figures prove that other industries will likely predominate in the future. TREO will continue to actively pursue business attraction opportunities that will shift the current economy to high skill, high wage jobs.
Power of Five Mobilization Kickoff
On July 26, TREO hosted a kickoff event to launch plans for the Economic Blueprint Power of Five Mobilization. The presentation included a review of the community activity relating to the Economic Blueprint since its launch in March. TREO then revealed the Power of Five Internal Mobilization Strategy, which includes the creation of a Power of Five Advisory Council.
The purpose of the Power of Five Advisory Council is to provide a mechanism for TREO Investors and economic development stakeholders to partner with others in shaping broad public policies and advance the region's competitiveness. Members of the Power of Five Advisory Council will act as the voice of the Economic Blueprint throughout the community and will represent TREO by engaging stakeholders within established groups to advance the strategies and goals of the Power of Five.
Click here to see the full Power of Five Mobilization Kickoff presenation. TREO will be in touch with Investors in the coming weeks to discuss their participation. If you are interested in learning more about the Power of Five Advisory Council or want to become involved, please contact Laura Shaw at 520-243-1940 or laura.shaw@treoaz.org.
Save the Date
TREO's Annual Luncheon will be held on Thursday, September 27 beginning at 11:30 a.m. at the JW Marriott Starr Pass Resort and will feature nationally-recognized speaker and author Dr. Richard Florida.
Sponsored by Cox Communications, Dr. Florida is one of the world’s leading public intellectuals on economic competitiveness, demographic trends, and cultural and technological innovation.
Seating will be limited for the event, and you can RSVP at any time to rsvp@treoaz.org. Formal invitations and additional details will go out as the date nears.
Richard Florida's Bio:
 Entrepreneur, speaker, researcher, and go-to guru, Richard Florida is the founder of the Creative Class Group, a global think tank headquartered in Washington, D.C. His discovery of the “creative class” has been lauded by the Harvard Business Review as one of the major breakthrough ideas of our time and has inspired leading companies like Apple, BMW, and Virgin Atlantic to rethink their marketing and business strategies.
In the last five years, Richard has penned two national bestsellers, The Rise of the Creative Class and The Flight of the Creative Class, which launched an intellectual revolution that has changed the way companies, nations, and communities compete and thrive. Combining in-depth analysis, cutting-edge trends, and fascinating personal stories, Richard is one of the world’s most dynamic, engaging, and sought-after speakers. A leading public intellectual on economic competitiveness, demographic trends, and cultural and technological innovation, he was named one of Esquire magazine’s Best and Brightest alongside Bill Clinton, Jeffery Sachs, and other luminaries.
To learn more, visit www.creativeclass.com.
Upcoming Events
• Private Investor Luncheon - On Aug. 29 Joe Snell will update investors on TREO's year two accomplishments and discuss TREO's FY07-08 Action Plan. The event includes lunch and will be an opportunity to “meet and greet” fellow TREO investors.
This private event for TREO investors will be held from 11:30 a.m.-1:30 p.m. Aug. 29 at the Arizona Inn, 2200 E. Elm St. Please RSVP by Aug. 6 to Glenn Fournie at 520-243-1944 or glenn.fournie@treoaz.org.
• IdeaFunding 2007 - The 10th annual IdeaFunding day-long workshop will be held Nov. 1 at the historic Manning House, 450 W. Paseo Redondo. Topics will focus on resources for businesses within various stages of development ranging from early R&D, to market validation, business formation, and through to commercial launch and growth phases. Click here to visit the IdeaFunding Web site and learn more.
Tucson MSA Ranked # 1
Expansion Management magazine, a national business publication for site selectors and corporate real estate professionals, recently ranked the Tucson MSA (Pima County) #1 for business recruitment and attraction in the mid-sized communities category. In addition, the City of Tucson was ranked the #5 mid-sized city for recruitment and attraction. Several other cities throughout the state also received high rankings, leading to Arizona being ranked #1 state in the country for business recruitment and attraction.
Click here to read the TREO's full press release or click here to read the article in Expansion Management.
More Tucson Rankings
• The July 2007 issue of Fast Company magazine names Tucson among the top 10 cities in the United States for job growth and high-tech industry concentration. The magazine cites Tucson for its reputation as "Optics Valley" and strong life sciences, environmental and aerospace industries. Raytheon Missile Systems, UniSorce Energy Corp. and Universal Avionics are recognized as examples of "fast companies."
• May 2007 - Inc. Magazine's list of Boomtowns 2007 ranked Tucson #12 of the top 20 mid-sized cities for doing business (ranking cities with 150,000-450,000 nonfarm jobs). Tucson was ranked #52 in Best Places Overall in the Boomtown list, out of 393 U.S. metros.
• Tucson ranked #36 for job growth and #85 overall in Forbes list of "Best places for business and career," from Forbes.com April 2007. The job growth ranking is a measure of business and quality of life factors, and the overall category reflects the work/life balance essential for attracting high wage businesses and workers.
• In April 2007 Tucson made Expansion Management's list of "5-Star Knowledge Worker Metros." Tucson ranks in the top 20% of 362 metro areas rated. The composite "knowledge worker" ranking takes in to account percentage of college educated population, university presence and R&D spending, and percentage of jobs in science and engineering.
• Also in April 2007, American City Business Journals and Bizjournals.com ranked Tucson #14 of the 66 largest metros in a list of the "hottest job markets for young adults."
Leadership Exchange Trip Update
More than 40 leaders from the Tucson community will travel to Portland, OR Aug. 8-10 for TREO's 2nd Annual Leadership Exchange Trip. Representatives from the public, private, education and non-profit sectors will travel to "the city that works" to meet with leaders from the Portland region to learn about the city's successes.
In order to achieve a competitive economy it’s important to constantly monitor what our competitors are doing. So why should Tucson leaders travel to Portland?
Portland’s vibrant downtown, mass transit systems and regional planning efforts are recognized as some of the best in the country. And between 1990 and 2000, the Portland region ranked eighth among the 50 largest metros in the rate of increase in its 25-to-34-year-old population. This age group is also known as the “Creative Class” and is vital to a region’s workforce and economy. Throughout the Economic Blueprint development process, each of these areas was identified by thousands from the Tucson community as a strategic focus area of improvement for the Tucson region.
The Portland Leadership Exchange Trip will focus on four topics: 1) Downtown Portland: What it Takes to Develop a Vibrant Urban Core; 2) Moving People: Why Transportation Works in Portland; 3) Regional Planning: Success and Cooperation Across Jurisdictional Boundaries; and 4) Attraction and Retention of the “Creative Class”: What Attracts Today’s Young Professionals.
"It’s important to realize that the road to success is a journey. By going to Portland, we will learn not only why Portland is known as 'the city that works,' but also how they got there," said Frances McL. Merryman, Vice President, Wealth Strategies Group, Northern Trust, NA and TREO Board Member and Chair of the 2007 Portland Leadership Exchange Trip.
During last year's Leadership Exchange Trip to Austin, TX, Tucson leaders learned about the importance and power of a “shared vision” and the need for a sense of urgency in establishing that vision. Less than a year later Tucson now has a shared vision – the Economic Blueprint – which Tucson leaders will be armed with when they travel to Portland to learn ways to successfully implement Blueprint strategies and achieve a competitive economy.
TREO's International Efforts
Frequently Asked Questions (FAQs)
Question: Why is TREO expanding to target international business development opportunities at this time?
Answer: TREO will continue to develop and pursue key business development opportunities in the U.S., and is launching an international program this year for the following reasons:
• Foreign firms typically pay between 13% to 18% more than the average U.S. wage, with employees in the most trade intensive industries (where combined exports & imports amount to at least 60% of their domestic industrial output), earning an annual compensation package that averages about $80,000. This data supports TREO’s strategy to increase the number of high-skill/high-wage jobs. (Source: U.S. Export Assistance Center, 2007).
• U.S. exports directly support more than 12 million jobs, and are an important component of our regional economy. (Source: U.S. Export Assistance Center, 2007)
• There is significant evidence of growth opportunity in Arizona. Most states have an equal level of trade and Foreign Direct Investment (FDI). Arizona is highly imbalanced, with much higher trade levels. This indicates a promising opportunity for significantly expanding FDI in the state.
• There are some excellent business attraction prospects to pursue - both domestic and international - for expansion/relocation to Arizona in the 10 driving cluster industries identified in the Economic Blueprint.
• Foreign companies like Arizona because of its geographic proximity to Mexico and the large population centers in Southern California.
• With manufacturing becoming increasingly difficult in European nations, there are indications that some European firms may be interested in establishing low cost manufacturing operations in Mexico with corresponding R&D/operations/logistics centers in Arizona.
Question: Does TREO’s International Business Development Program relate to the Economic Blueprint – the economic development vision and plan for the region’s future that was released earlier this year?
Answer: One of the strategies presented under “High-Skill/High-Wage Jobs” during the rollout of the Blueprint to the community, was to “Expand and Coordinate International Foreign Direct Investment and Trade Opportunities” by consolidating international programs in the region to provide a one-stop shop for Foreign Direct Investment and trade. TREO’s International Business Development Program was designed precisely for this purpose. Further, the driving industries identified in the Economic Blueprint will be the primary targets for our proactive efforts to attract Foreign Direct Investment (FDI) to the region.
Question: What is included in TREO’s International Business Development Program?
Answer: There are three parts to TREO’s International Program – 1) Explore the development of an inland port initiative to enhance Southern Arizona’s positioning as a transportation and logistics hub for regional, national, and global commerce; 2) the establishment of a one-stop collaborative effort between regional partners to strengthen the regional brand, add operational efficiency for managing international leads and prospects, and to better align efforts already in place; and 3) the Arizona Global Network (AGN), a super regional marketing alliance and framework between Tucson, Phoenix, and the Department of Commerce for promoting foreign direct investment (FDI) in Arizona to the global business community.
Question: I thought international business development efforts came with big price tags. What is TREO’s strategy for managing a cost effective international effort?
Answer: When it comes to international business development, a coordinated regional collaborative effort is the way to go. It allows all of the members to extend and leverage their assets and their resources for the greatest return-on-investment. By working collaboratively with other partners throughout the region, we can all represent each others’ interests, so that when one member of the Southern Arizona team is present, the region is represented as is each team member.
Question: What results can be expected from this effort? How will you know if the program is working?
Answer: TREO anticipates positive results in two key areas – increased Foreign Direct Investment (FDI), and increased trade. FDI successes and trade increases are easy to identify and measure, so we will have no problem monitoring our success and return-on-investment.
Inland Port Update
As TREO transitions into its third year of operations, it has added an international component to its Business Development efforts. An important piece of TREO's international activities is work on a Tucson inland port initiative.
What is an inland port?
An inland port is a location where the processing of trade can be shifted from the national borders to a common, strategically located inland location. An inland port is a one-stop shop for transportation and value-added services and they facilitate activity coordination and information sharing among different supply chain stakeholders at a shared physical location, resulting in an improved supply chain. (Source: Texas Transportation Institute, 2003, and "Impacts on Inland Port Locations," Texas Department of Transportation (TxDOT), 2002.
Where we've been
In the late 1990s a concept for establishing a transportation hub in Tucson was developed that would capitalize on 1) Tucson's strategic geographic location on major north-south and east-west corridors that connect it to the global marketplace; and 2) expanding opportunities in the transportation and logistics industries. In 2006, Pima Association of Governments (PAG) and the City of Tucson sponsored the development of a strategic plan for an inland port which was completed by The Tioga Group in April, 2007.
Where we are today
• The Strategic Plan developed by the Tioga Group validated the project's viability and provided "next step" recommendations for the inland port initiative. One of the recommendations was for the inland port efforts to be coordinated by an economic development group.
• In 2007, the City of Tucson approached TREO about taking on the inland port efforts. Starting July 1, 2007, the inland port effort was moved to TREO for the next stages of development.
• Al Altuna has transitioned to TREO's staff after working on Puerto Nuevo with PAG. Altuna is a transportation and logistics specialist who will work exclusively on the inland port initiative as project manager. Altuna is also a founding member of SALEO (Southern Arizona Logistics Education Organization).
As TREO begins work on the inland port initiative, it's important to recognize the hard work that has previously been completed on the inland port concept, which has created a great launching point for the next phase of this initiative.
Did you know?
TREO's website features Success Stories and photos from local businesses and organizations in the Tucson region. Click here to read the Success Stories.
Would you like your business or organization to be featured on TREO's website as a Business Success Story? Contact Erin.Coulter@treoaz.org or call 520-243-1935 for more information.
120 North Stone Ave., Suite 200
Tucson, Arizona 85701
520.243.1900 * 1.866.600.0331 * Fax 520.243.1910
www.treoaz.org
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