Tucson: Economy

Major Industries and Commercial Activity

Copper mining has traditionally been a vital part of the city's economy; in 1976, for instance, one of every twenty Tucson residents was a copper miner. Seven years later, a combination of foreign competition and depressed copper prices forced a dramatic downturn in mining industries nationwide, with the result that only four-tenths of a percent of the working population was employed in mining by the mid 1980s. The early 1990s saw an upturn in the mining industry again. In Arizona the mining industry continues to contribute to the economy, although locally and globally the industry has shown signs recently indicating a slowdown.

At the time of the mining crisis, Tucson and southern Arizona looked to economic diversity. In the 1980s the area experienced economic growth from Davis-Monthan Air Force Base with more than 9,200 employees and the University of Arizona with more than 11,000 employees as well as growth in the high-tech and service industries, particularly in banking.

Today the Tucson economy is based on the arts, tourism, manufacturing and high-tech industries. Unique because of Tucson's relatively small size is the fact that a ballet, symphony, live theater, and opera call Tucson home. Tucson's dependably dry and sunny climate assures continuing growth in tourism, an industry that employs about 1 in 10 workers in the metropolitan area labor force and brings in well over 1.5 billion dollars annually. Manufacturing activity has doubled in the last 10 years and includes such companies as AlliedSignal, Weiser Lock, 3M, Burr-Brown, Environmental Air Products, Inc., Krueger Industries, Inc., and Raytheon Missile Systems Company. Marked changes have come about elsewhere in Tucson's economic base, however, with copper mining being most deeply affected.

Tucson has actively promoted expansion in the high-technology industry. The Milkin Institute ranked Tucson the seventh Best Performing City out of 200 Metropolitan Areas in large part because of job growth in the high-tech arena. More than 300 local companies are directly involved in information technology. Other growing high-technology areas are bioindustry, aerospace, environmental technology, plastics and advanced composite materials, and teleservices. It is hoped that these industries will continue to be a catalyst, drawing companies to Tucson.

Another factor in the renewed strength of Tucson's economic base is the building or relocation of major corporations in the area. Industry leaders include Raytheon Missile Systems, IBM, Honeywell, Texas Instruments, Intuit, America Online, and Bombardier Aerospace.

Tucson has become more involved in international trade and has developed close partnerships with Mexico. One development asset in Tucson is the city's proximity to the Mexican border. The city actively encourages the growth of twin-plant or "maquiladora" industries locating part of their operations in Tucson. Increased expansion is predicted in the manufacture of electronics, aerospace, and computer component products.

Items and goods produced: aircraft and aircraft parts, electronic equipment, steel castings and fabrications, flour, boxes, agricultural chemicals, aluminum products, radios, mobile homes, air conditioning machinery, creamery products, beer, liquor, saddles and leather goods, apparel, native American and Mexican novelties

Incentive Programs—New and Existing Companies

Local programs

The Greater Tucson Economic Council's foundation is based on an industry cluster concept. The cluster concept attracts and empowers new businesses by promoting collaboration, enhancing research and production capabilities, and creating more powerful advocacy for common needs. The six business clusters include: aerospace, life sciences, environmental technology, information technology, optics, and advanced materials. The Tucson Metropolitan Chamber of Commerce works to promote a favorable business atmosphere conducive to attracting, sustaining, and expanding industrial and service sector employers. Its Economic Development Division provides information, counseling, training, and other services. The University of Arizona, one of the top research universities in the country, plays an active role in attracting businesses and encouraging the entrepreneurial spirit in Tucson.

State programs

Arizona is a pro-business state. It levies no unitary tax, no inventory tax, no franchise tax, no municipal income tax, and no sales tax on direct sales to the state or federal government. It has developed targeted incentives to encourage the recruitment of desirable new businesses and to encourage the growth of existing businesses. Innovative programs designed to encourage job growth include the Workforce Development and Job Training Progam, Enterprise Zones, Foreign Trade Zones, and Research and Development tax credits.

Job training programs

A work force recruitment and job training program is administered by the state and provides training and retraining for specific employment opportunities with new and expanding businesses and businesses undergoing economic conversion.

Development Projects

More than 900 million dollars of investment and tax dollars is funding The Downtown Rio Nuevo project which will add new attractions, shopping, restaurants, infrastructure, office space and residential housing in downtown Tucson. More than 1,100 housing projects are planned or under construction. Other new developments will include parking garages, streetscapes, and enhancements to arts districts and museums.

Economic Development Information: Tucson Metropolitan Chamber of Commerce, 465 West St. Mary's Road, PO Box 991, Tucson, AZ 85702; telephone (520)792-1212; fax (520)882-5704. Greater Tucson Economic Council, 33 N Stone, Ste 800, Tucson, AZ 85701; telephone (800)374-4769

Commercial Shipping

Tucson is linked to national and worldwide markets via Tucson International Airport, which receives service from major air cargo carriers. The Union Pacific railroad provides freight service; 39 motor freight carriers ship goods through facilities in Tucson.

Labor Force and Employment Outlook

Tucson attracts 18,000 to 20,000 new residents each year and offers a work force from which employers can draw relatively young and productive workers. Tucson has committed itself, through its educational institutions, to train and retrain potential employees. About 83 percent of residents have completed high school and 27 percent have 4 or more years of college education; 63 percent (age 16 and over) are in the labor force.

The following is a summary of data regarding the Tucson metropolitan area labor force, 2004 annual averages

Size of non-agricultural labor force: 359,100

Number of workers employed in . . .

natural resources and mining: 1,300

construction: 23,900

manufacturing: 28,300

transportation and utilities: 58,000

information: 7,500

financial activities: 16,600

professional and business services: 42,200

educational and health services: 47,700

leisure and hospitality: 38,800

other services: 14,700

government: 79,500

Average hourly earnings of workers employed in manufacturing: $14.53

Unemployment rate: 4.1% (January 2005)

Tucson: Economy

Largest private employers Number of employees
Raytheon Missile Systems 10,200
Phelps Dodge 3,783
Carondelet Health Care 3,328
Fry's Food and Drug 3,000
TMC Health Care 2,350
Asarco 2,700

Cost of Living

According to the Metropolitan Tucson Chamber of Commerce, in 2004 the median sales price for a single family unit was $128,900. Average size for these units was 2,798 square feet. The average apartment rental rate for a two-bedroom unit was $707.00.

The following is a summary of data regarding key cost of living factors for the Tucson area.

2004 (3rd Quarter) ACCRA Average House Price: $254,751

2004 (3rd Quarter) ACCRA Cost of Living Index: 99.2 (U.S. average = 100.0)

State income tax rate: Ranges from 2.87% to 5.04%

State sales tax rate: 5.6% (food and prescription drugs are exempt)

Local income tax rate: None

Local sales tax rate: 2.0% (real estate, groceries, and prescriptions are exempt)

Average property tax rate: $17.00 per $100 of assessed valuation (2003); rate is assessed at 25% of fair market value of a home.

Economic Information: Tucson Metropolitan Chamber of Commerce, 465 West St. Mary's Road, PO Box 991, Tucson, AZ 85701; telephone (520)792-1212; fax (520)882-5704; email info@tucsonchamber.org. Pima County Treasurer, telephone (520)740-8344