AZ Tech

M A G A Z I N E

WHAT'S Arizona positions NEXT itself to be a test site for unmanned aircraft

Bioscience Roadmaphas paved a path toward the future

AZTECH: AEROSPACE

By MICHAEL GOSSIE

the race for aerosPace arizona’s selection as an unmanned aircraft test site could help the state’s economy soar and boost its aerospace industry as the dod cuts back

Arizona is one of 35 of states that want to be one of six FAA test sites for unmanned aircraft.

t

he next several months could change the face of arizona’s aerospace industry.

“With looming federal budget cuts, arizona’s defense and aerospace manufacturers stand to face some big changes,” said Glenn hamer, president and ceo of the arizona chamber of commerce and industry. “it is incumbent upon our leaders to continue to position our state as a leader in this field by aggressively pursuing unmanned aerial systems (uas) flight testing, research and manufacturing in arizona.” unmanned aircraft system is the official federal aviation administration (faa) term for an unmanned aerial vehicle. and the reason they are relevant right now is because congress has mandated that the federal aviation administration (faa) designate six uas test sites to provide data to safely integrate uas into the nation’s airspace by 2015. arizona is one of 35 of states that want to be one of those six test sites. The faa is scheduled to announce the six sites selected by the end of december.

“These are very intelligent systems,” said vicki Panhuise, chairman of the arizona aerospace and defense commission. “They have lots of capabilities. They are still piloted, but there isn’t a pilot in the air. There is a pilot on the ground controlling the flight and that pilot faces the same certification requirements as pilots in the air.” all the regulations that now guide aircraft are based on having a pilot in the cockpit, someone in the aircraft who can see what’s going on around them. “even with all the technology available in today’s aircraft, the pilot relies on his or her ability to see and avoid,” Panhuise said. “uas 44 AB | September-October 2012

rely on their ability to sense and avoid. regulations for uas have to be developed so that uas can safety share the airspace with piloted aircraft.” for arizona, selection as an uas test site is important because it could mean an economic boost for the state’s aerospace industry at a time when the department of defense is cutting back.

“The advent of unmanned aircraft systems (uas) in the defense sphere is extremely exciting for arizona manufacturing,” hamer said. “The arizona Manufacturers council is working with the arizona aerospace and defense commission and other stakeholders to secure arizona’s position as a leading location for research and development, manufacturing, and testing of uas, and we are supporting arizona’s proposal to be designated by the faa as a national uas testing area.”

The economic impact of aerospace and defense in arizona is undeniable. arizona is home to 37 defense-related companies, which employ more than 35,000 residents — with an average annual total compensation of $109,000, more than twice the statewide average for all employed individuals — and create a gross economic impact of $8.8 billion. Throw in the military’s presence in the state — 96,000 jobs and an annual economic impact of $9.12 billion — and it’s easy to see why becoming an uas test site is critically important to sustaining this important sector of arizona’s economy. and everyone — from government agencies to economic development groups to educational institutions — are doing everything they can to ensure the aerospace and defense industry’s continued success in arizona. in addition to educating and preparing the next generation of innovators, arizona’s colleges and universities are partnering with private industry and are engaged in research activities that

aim to fill the future needs of agencies like nasa and the u.s. departments of defense and homeland security. The state hosts a broad range of aerospace and engineering research facilities, including the arizona laboratories for security and defense research, and robust academic research at the university of arizona, arizona state university, embry-riddle aeronautical university and northern arizona university. additionally, cochise college’s northrop Grumman innovation campus offers associate degrees in uas flight operations and system technicians. but the key to arizona’s aerospace and defense future may rest in its ability to become one of the six faa-approved test sites for uas.

“We have seen a large amount of growth in the area of unmanned aircraft,” said toni beutel, business manager for the attack helicopter programs at boeing in Mesa. “The goal of any military operation is to take the soldier out of harm’s way. unmanned aircraft accomplishes that goal.” to put arizona in its best position to become one of the six selected uas test sites, the arizona aerospace and defense commission (aadc) — headed up by Panhuise — and the arizona commerce authority (aca) established the unmanned aircraft systems arizona advisory committee. The committee’s task is create and communicate a shared uas vision for arizona.

“We are trying to build a plan around arizona’s assets and abilities because we really have so much to offer,” Panhuise said. “arizona already has the largest uas test site for the department of defense (dod). More than 10,000 uas-certified pilots have been trained at fort huachuca. it gives us a wonderful workforce pool to draw from.”

The key feature of the committee’s plan is aligning arizona’s strengths — geography, climate, weather, restricted airspace, uas history, assets, academia, industry — with the faa’s needs, and meeting with arizona’s stakeholders to align messages and support.

“We have 100 percent bipartisan support for our proposal,” Panhuise said. We have both sides of the ticket behind us. We have support from the legislature and from the mayors. The feedback we’ve received in that the faa will be looking for proposal with universal support, so having the strong regional and statewide approach that we have will play much better than a local approach.”

The arizona contingent is building its proposal around a “center of excellence” or “hub and spoke” approach, with multiple test sites planned for a single arizona test range. “uas come in all sizes and varieties,” Panhuise said. “There is everything from what looks like a four-pound flying beer can to aircraft with very large wingspans that need a lot of airspace. There are a lot of different requirements. arizona can cover all of those requirements.”

The other thing arizona is going to have to cover: The cost of building all the infrastructure required to become a uas test site.

“These are all authorization bills we are talking about, not appropriation bills,“ Panhuise said. “There are no dollars involved in this decision. The faa has no funding to build the necessary infrastructure or to pay for infrastructure. They are expecting economic development groups and industry to do that for them.”

Panhuise pointed out that while it might be a short-term dilemma to figure out how arizona will pay for the infrastructure needed

to become a uas test site, once it’s paid for, it will open more doors for economic development groups like GPec and the aca to draw new businesses and start-up companies to arizona. “one of the things the faa is looking for is geographic and climactic diversity,” Panhuise said. “arizona has got that covered. We can put test sites together that provide the faa with significant diversity. The only thing we can’t do in this state is arctic or maritime.”

ArizonA’s MAJor PLAYers Here are the five biggest companies in Arizona’s defense and aerospace industry: raytheon Missile systems: Headquartered in Tucson with 11,500 Arizona employees, Raytheon Missile Systems designs, develops, and produces weapon systems for the U.S. military and the armed forces of more than 50 countries.

Honeywell international: With more than 9,700 employees at 21 Arizona facilities, Honeywell International contracts with the Department of Defense through both their Aerospace and their Automation and Control Solutions business units. In particular, Honeywell Aerospace is headquartered in Phoenix, with major facilities in Tempe, Glendale and Tucson. general dynamics: With more than 5,000 employees at its Scottsdale headquarters, General Dynamics C4 Systems specializes in command and control, communications networking, computing and information assurance for defense, government and select commercial customers in the U.S. and abroad. boeing: The company’s 4,800-employee Defense, Space & Security facility in Mesa is best known for producing the AH-64 Apache attack helicopter for the U.S. Army.

Additional work at the Mesa facility includes production of electrical subassemblies for the F/A-18, F-15 and C-17 aircraft. orbital sciences corp.: With about 1,400 employees at its facilities in Chandler and Gilbert, Orbital develops and manufactures small- and medium-class rockets and space systems for commercial, military and civil government customers. Orbital also provides satellite subsystems and space-related technical services to U.S. government agencies and laboratories.

AB | September-October 2012 45

AZTECH: LAW

By MICHAEL GOSSIE

the laW and technoloGy from piracy to privacy, changes in technology will usher in the law

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e all know how quickly technology is changing. but how will changes in technology affect changes in the law? as arizona enters its second century, three arizona attorneys weigh in on the legal changes they see coming as technology continues to rock our world.

Walsh

Cai

Cummerford

Cheryl Walsh, shareholder, burch & Cracchiolo, P.a.: Just 107 years ago, the Wright brothers flew a plane for the first time. Who could have imagined then that we would have the technologically-rich world we have today? With that in mind, we do have technological advancements in our midst today that are ripe for challenge and examination. for instance, access to information and data as a result of technology can increase safety and efficiency of law enforcement substantially; however, privacy and personal rights must be balanced in the process. The supreme court will be tackling this issue in the current session by considering the admissibility of GPs tracking device information obtained without a warrant. cameras are everywhere and soon we will enter 46 AB | September-October 2012

our homes and businesses with eye recognition technology that will make the individuality of fingerprinting more obsolete than ever. Protecting our rights while advancing our civilization is a delicate balance.

Yu Cai, associate in Polsinelli shughart’s science and technology practice group: intellectual property development and protection will become an essential part of any business plan.

Particular attention must be paid to the recent change in patent law from “first to invent” to “first to file,” requiring earlier interaction and involvement between inventors and their legal representatives. john e. Cummerford, co-managing shareholder, Greenberg traurig: until fairly recently, “privacy” — as we think of it today — was a rare commodity. The word “privacy” doesn’t even appear in the constitution, no doubt because it was so uncommon when the constitution was drafted. technology has sharply reduced — and in my view, will soon eliminate — the whole notion of personal privacy. naturally, this will cause a lot of worry and fear. but, when nobody’s privacy is safe, how will that affect our own inclination to invade the privacy of others? i think it will cause people to actually become more respectful of others, and will — for lack of a better term — cause them to avert their eyes.

That is, will the muck-raking reporter who makes a living ferreting out scandals and embarrassing others really want someone to find out, say, his own bank balance, or what websites he has visited, or with whom he has been keeping company and put that information on the Web? Probably not, although that information may be readily available. and so, i think that recognition that we are all vulnerable to invasions of privacy will foster more civility and — dare i say — more kindness among people. and that will be a good thing indeed.

influential iP attorneys Here are five go-to intellectual property attorneys who help Arizona innovators, entrepreneurs and companies protect their ideas: Ari M. Bai Polsinelli Shughart (602) 650-2061 polsinelli.com Bai has extensive experience preparing and prosecuting patents related to mechanical and electrical engineering inventions with a special emphasis on medical devices, thermal control systems and software inventions.

Since 1967, we have taken pride in representing generations of local families and businesses, from every day matters, to the high profile cases. Whether your problem is big or small, we are here for you from Generation to Generation.

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George C. Chen Bryan Cave LLP (602) 364-7367 bryancave.com Chen partners with long-term clients to develop, protect, enforce, defend, license, and commercialize intellectual property and other business assets. His practice includes litigation, licensing, counseling, and prosecution of patent, trademark, copyright, trade secret, unfair competition, Internet, cybersquatting, and other intellectual property matters.

Business Formation & Counseling Estate Planning & Trust Administration Criminal & DUI Probate & Guardianship/Conservatorship

Robert J. Itri Gallagher & Kennedy (602) 530-8019 gknet.com Itri concentrates his practices in the area of intellectual property (copyright, trademark, trade secret and patent) litigation, licensing and protection. He has counseled start-up and Fortune 1000 companies in the protection and monetization of their established and emerging technologies.

A.J. Moss Squire Sanders (602) 528-4839 squiresanders.com Practice includes all areas of intellectual property, particularly U.S. and foreign patents (in aerospace, electronics, software and biotech systems) and U.S. and foreign trademarks.

Richard E. Oney Tiffany & Bosco, P.A. (602) 255-6094 tblaw.com Engineering background and in-depth experience protecting technology assets, including litigation, transactions and patents involving Internet, electronics, business methods, software and mechanical, medical, and pharmaceutical technologies.

Co-Founders C.D. Owens, Esq. Michelle J. Perkins, Esq.

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We are located near the intersection of Scottsdale and Thomas Roads, just east of Scottsdale Road, on the north side of Thomas, and conveniently located just off the 101.

AB | September-October 2012 47

AZTECH: ENERGy

By MICHAEL GOSSIE

de blasi

davey

let there be liGht arizona energy consortium outlines roadmap that will bolster the state’s energy industry

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he arizona energy consortium — co-chaired by Michelle de blasi, a shareholder at Greenberg traurig, and chris davey, executive director of enviroMission inc., developer of the iconic solartower — is putting the finishing touches on its energy roadmap, which the group hopes will bolster the state’s energy industry like the bioscience roadmap has sparked the bio industry in arizona. az business magazine recently spoke with de blasi and davey about what business leaders can expect to hear when the roadmap is released.

Q a

uestion: When do you hope to release the energy roadmap?

nswer: The energy roadmap is expected to be released on sept. 15, followed by an extensive education and promotional series of meetings both within the aec and with stakeholders.

Q a

: What short-term impact will the roadmap have on energy in arizona?

: We hope to have an immediate impact on growing the energy sector regionally, investing in infrastructure to aid in energy export opportunities, educating our stakeholders, and developing a simplified and more cohesive message for the industry.

Q

: What long-term impact will the roadmap have on energy in arizona?

48 AB | September-October 2012

a

: some of our long-term goals are to (1) develop arizona into a key energy hub for the region, providing less expensive power into larger markets such as california, (2) change our way of thinking to include a regional approach, thinking beyond our boundaries into our neighboring states and Mexico, and (3) streamline the permitting process for large generation projects that are key to arizona’s export of power.

Q a

: What kind of impact do you hope the roadmap makes on industry and economic development in arizona?

: These are the key measures of success: • increased internal economic revenue as a direct result of arizona’s growing energy industry in the form of heightened generation exportation.

• increased job creation and higher-waged salaries for the state’s energy workforce resulting from energy security or self-sufficiency due to a reduction in the nation’s reliance on foreign energy sources and increased emphasis placed on internal renewable energies.

• Progressive advances within the solar industry’s technology innovation sector.

• reduced greenhouse gas emissions resulting from increased use of solar energy.

Q a

: What impact do you hope the roadmap makes on lawmakers?

: We hope to educate lawmakers to avoid ineffective legislation and encourage legislation that accomplishes the measures of success.

5 Things

Everyone Should Know About Identity Theft

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Anyone can be a target.

In 2011, 11.6 million Americans were victims of identity theft. The total take? $18 billion.1 In 2009, even the Chairman of the Federal Reserve was a victim.2 Now add major security breaches from trusted companies and you get the point. Still think it can’t happen to you?

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You shred documents, use secure websites and strong passwords. But your personal information is everywhere. Your doctor could have your Social Security number. Or your employer, your bank, and maybe even the kid handling your credit application for that new TV. You may be doing a whole lot right, but what about everyone else?

If your credit or debit card is stolen, you can replace it. But what happens when shady characters get your Social Security number? Identity thieves use black market websites to buy, sell and trade stolen information around the world. Is your Social Security number really protected?

With just a few pieces of your personal information, identity thieves can get a loan, mortgage or an equity line of credit —on your home. They could even buy a weapon and commit a crime. Profitable for them, but what about you?

You know the risk, so you need the most comprehensive identity theft protection ever created, LifeLock Ultimate™. It protects against identity theft before the damage is done. And only LifeLock Ultimate monitors bank accounts for takeover fraud.* You’ll also get unlimited access to all three credit reports and scores. And it’s all backed by the LifeLock $1 Million Total Service Guarantee.**

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AB | September-October 2012 49 †Offer is for new LifeLock members only. Try LifeLock service for 60 days. If you are not completely satisfied within your 60-day period, just call 1-800-LifeLock to receive a full refund of your purchase price.

AZTECH: CEO

By MICHAEL GOSSIE Photograph by COry BErGqUISt

todd davis ceo, lifelock,

a tempe-based identity theft protection company how is being CeO of lifelock different from leading other firms?

We get to define a whole new industry, so we have to go out and tell people that there is a product for identity theft protection. We have to take some chances. We have to do some things that are more aggressive. We are in a newly defined industry, so that presents some unique challenges that you wouldn’t face as ceo of a company in a more traditional industry. how difficult is it to combat those that try to outsmart technology? as we put up barriers, the criminals continue to get better. We battle that with advanced, patented technology. We develop technology that can turn the table and provide proactive protection. are there misconceptions about lifelock?

We sometimes hear, “What can lifelock do that i can’t do myself?”

Well, you can cut your own hair and do your own taxes, but you don’t.

We believe that we have the most comprehensive services in the industry. The ability to evolve and change has given us breadth of coverage that consumers don’t realize.

are there challenges to doing business in arizona?

We don’t have great clarity on what the message is for arizona. are we home building? solar? bio? chip manufacturing? i would love to see us get on a clear message that doesn’t change with every political cycle.

What has been your biggest challenge at lifelock? early on, i was out there being disruptive, giving out my social security number and everyone thought i was crazy. i should have done a better job working with regulators because we all really wanted the same thing: to protect consumers from identity theft. it was a challenge to weather those attacks and the misperceptions of who we were. but we were able to manage through that and we grew through the process.

in 2010, lifelock agreed to pay $12 million for using false claims in advertising. how were you able to manage lifelock through that?

The $12 million we paid was a consumer redress payment — payments to consumers who may not have been 100 percent satisfied with our service based on our advertising claims. More importantly, the $12 million we paid in 2010 was related to our historical advertisWhat makes you a great CeO for lifelock? ing practices when the company was still in its infancy with an earlier i’m secure enough to know that i’m not the smartest guy at lifeproduct offering. by the time we paid the fines, we had already implelock. i’ve surrounded myself with men and women who are much mented changes internally to make sure our message to consumers smarter than me and are fantastic at their jobs. was clear. our retention rate stayed solid and but i do have a vision for this company and i am VITAL STATS: TODD DAVIS sometimes when we issued a refund as part of passionate about it and i lead us down that path  Earned the 2009 Ernst & young the agreement, the consumer sent it back to us without the need to always being right. and said, “We don’t want it. We are happy with Entrepreneur of the year award for the service.”

Orange County/Desert Cities region Why have you kept lifelock in arizona? for a top Emerging Company People don’t always realize what a great talent  Earned the Arizona Business LeadWhat achievement are you most proud of? pool we have here ... it’s been a perfect place for We are going to leave a legacy with lifelock ership Association’s Leadership Award us to grow because i don’t have to compete with  LifeLock was honored with the of not just creating a household name brand, facebook and zynga and Groupon, who are but a legacy that we took on the most reported 2010 Best New Product or Service of trying to hire all the talent. We get to be selective the year Stevie Award crime in america, and our goal is to beat it over and build a talent base that can take on anybody  LifeLock’s logo is featured on the time. in the nation.

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Embry-Riddle is the world’s premier aerospace university.

We offer students the #1 collegiate flight education program and the opportunity to showcase their skills in national competitions.

Our female student teams earned top 10 finishes in the 2012 Air Race Classic and won best overall collegiate team after competing against more than 50 talented women pilots. But that’s not all.

Embry-Riddle student flight teams have won the National Intercollegiate Flying Association’s annual Safety and Flight Evaluation Conference (SAFECON) eight times – proving time and again that we set the standard for excellence in aviation and safety.

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AZTECH: SECURITy

By MICHAEL GOSSIE

tech tackles bad Guys

home security companies use latest innovations to introduce next generation in protection

i

f a wannabe robber is worried that he’s going to set off an alarm when he kicks in your door, he is less likely to break into your home, statistics show.

The department of Justice says it’s a fact: burglars steal less property from houses protected with alarms. but 21st-century home security systems offer more than more than just a loud alarm that goes off to scare off would-be robbers. companies like adt, frontPoint, titan alarm, and integrated Protective systems are using the latest technology to keep homes out of harm’s way. cox arizona is the latest company to enter the protection business after in unveiled cox home security in april. cox’s new service allows its customers to both monitor their homes and keep their loved ones safe.

“The new cox home security system uses advanced technology to connect customers at the level of their choice with options that bring home security right to their fingertips,” said steve rizley, senior vice president and general manager for cox arizona. in addition to safety, the home security system acts as a remote personal assistant, connecting cox customers to their home appliances and thermostats, enabling customers to save on energy bills through programming while monitoring the use of energy throughout the entire home. cox home security also monitors carbon monoxide and home smoke detectors, alerting homeowners via email or text when levels are unsafe. The system also automatically dispatches fire emergency officials to the scene.

The reliable, 24/7 secure monitoring systems feature:  intrusion and home safety monitoring (includes fire, gas and flood);  remote access so the system can be controlled away from home;  email/text alerts to notify customers of occurrences at the home ;  safety sensors to detect hazardous conditions such as carbon monoxide and smoke;  secure video surveillance available via smartphone or computer;  control of home functions such as lighting and temperature. to give you a sense of what you will spend on a high-tech home security system, cox’s system is free with a $99 installation and three-year contract with service plans starting at $29.99 for existing cox customers.

54 AB | September-October 2012

editor’s vieW

When I was growing up watching “The Jetsons,” I always wondered if I would live long enough to have some of the cool gadgets George Jetson had in his home.

Here’s the cool thing: I have lived long enough to have some of those gadgets and I’m using them in a house that was built before television — home to “The Jetsons” — was even invented.

My Cox Home Security system has turned my Downtown Phoenix historic home — built in 1918 — into a 21st Century Smart Home. Using an app on my smart phone, the system gives me the ability to adjust thermostats, turn lights on and off, arm and disarm the security system, and monitor the house using four surveillance cameras. I can do that from anywhere in the world.

While I’ve used the cameras to mostly laugh at my dog getting on the bed the moment I get to work, I did use it to avoid a possible disaster when I left for a trip to New York and saw that I’d left a back door cracked open. I was able to make a quick call and get the house locked up.

I love my neighborhood, but in the year preceding the installation of my Cox Home Security system, I had three bikes stolen and an attempted break-in. Since the system has been installed, there have been no incidents.

Now THAT’S a Smart Home.

Now you can control your home from anywhere.

Cox Home Security puts you in control from wherever, whenever.

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Cox Home Security is available to residential consumers in Cox Arizona service areas. Service not available in all areas. Certain advertised features require the Preferred service plan. Prices may require a 3-yr monthly service contract and subscription to Cox video, Internet and/or phone service. A high speed Internet connection is required and not included in price. Remote usage requires a compatible PC, smartphone or tablet with Internet and/or email access and is not included. Applicable monthly service charges, installation, additional equipment, taxes, trip charges, and other fees may apply. All prices and packages are subject to change. Month-to-month and home security service onlyAB pricing available. Subject to credit approval. | September-October 2012 Other 55 restrictions may apply. Local ordinances may require an alarm user permit. Š2012 Cox Advanced Services Arizona, LCC. All rights reserved

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AzTECH: HEAT (HEALTHCARE, ENERgy, AEROSPACE AND TECHNOLOgy)

by MIChael GOSSIe

tappInG IntO State’S pOtentIal

bioscience Roadmap has led arizona down the path of innovation

W

hen arizona’s bioscience Roadmap was put into place a decade ago, the 10-year plan was an invitation to innovation.

The state has accepted that invitation with open arms.

“The bioscience Industry has directly, positively impacted the arizona economy through our recent Recession,” said Derek Kirkland, life science leader for DpR Construction, which has built more than $600 million in bioscience projects over the life of the bioscience Roadmap. “It has allowed arizona to maintain and grow a construction workforce, which has shown a resurgence since late 2010.”

The success of the Roadmap, a long-term plan to make the state’s bioscience sector globally competitive, is undeniable and quantifiable.

JObS: arizona bioscience employment saw vigorous growth of 7.4 percent during the post-recession period of 2009-10, even as the state’s overall private sector lost 1.8 percent.

From 2002 to 2010, bioscience jobs increased by 41 percent in arizona, adding nearly 28,000 jobs for a total of 96,223. The U.S. posted an 11 percent gain in bio jobs during this span.

FirmS: The number of bioscience establishments in arizona rose 27 percent from 2002 to 2010, increasing from 682 to 867. This compares with 20 percent growth for the U.S. The research, testing, and medical-labs sub-sector remains the largest in arizona, with 436 18 AB | November-December 2012

establishments, and since 2002 has expanded fastest, growing 49 percent.

WAgES: bioscience workers in arizona earn an average annual salary of $55,353, compared with $42,858 for all private-sector industries. From 2002 to 2010, salaries increased 27 percent.

NATiONAl iNSTiTuTES OF HEAlTH grANTS: In 2011, arizona received $184.1 million in funding from the nIh, the industry gold standard. That total is smaller than 2009 and 2010, which were boosted by nIh federal-stimulus awards, but 14 percent higher than 2008. From 2002 to 2011, nIh funding in arizona grew faster (25 percent) than the top-10 funded states (20 percent) and the overall U.S. (17 percent). rESEArCH AND DEvElOpmENT ExpENDiTurES: bioscience-related academic research and development expenditures at arizona’s universities reached $437.1 million in 2009 (the most recently available data). This represents a 56 percent gain since 2002, slightly higher than the overall U.S. growth (55 percent). vENTurE CApiTAl: arizona rebounded from a difficult 2010 with a 2011 total of $69 million in bioscience venture capital. This represents the second-most productive year since 2002, though it is still short of the Roadmap goal of $100 million. implEmENTATiON: Of the 19 action items in the Roadmap recommended by battelle in 2002 to achieve over 10 years, progress has been made on 18, or 95 percent, including substantial progress on 10.

TGEN/IGC THE BIODESIGN INSTITUTE THE PHOENIX BIOMEDICAL CAMPUS ARIZONA BIOMEDICAL COLLABORATIVE sanofi-aventis TUCSON RESEARCH CENTER CARIS LIFE SCIENCES RESEARCH & DEVELOPMENT VENTANA MEDICAL SYSTEMS BUILDING 2 COVANCE LABORATORIES RESEARCH & DEVELOPMENT CENTER HEALTH SCIENCES EDUCATION BUILDING

in Joint Venture with Sundt Construction, Inc.

BUILDING ARIZONA’S BIOSCIENCE ROADMAP DPR CONSTRUCTION is an award-winning national builder delivering the technically challenging Bioscience, Life Science, Research & Development and Healthcare facilities across Arizona and the nation.

DPR Construction-AZBuss bio RDMap section-2012 11 - 12 Thursday, October 25, 2012 12:00:41 PM

602.808.0500 | www.dpr.com

AB | November-December 2012 19

AzTECH: HEAT

The bioscience industry has brought in more than $600 million in projects for DPR Construction since the Bioscience Roadmap was launched a decade ago.

“In the next decade, I see phoenix becoming a global center of personalized diagnostic medicine,” phoenix Mayor Greg Stanton said. “an example of this is the 3-D cell imaging for lung cancer detection that is currently being done by vision Gate, which is located in tGen’s headquarters.” tGen — the translational Genomics Research Institute, which was built by DpR Construction in downtown phoenix — may have had the single biggest impact on helping the Roadmap achieve its goals. according to a recent study, tGen — established in 2002, the same year the Roadmap was implemented — provides arizona with a total annual economic impact of $137.7 million. The study also showed that tGen operations in 2010 produced $14.40 for every $1 invested by the State of arizona, supported 737 full-time jobs (directly and indirectly), generated $4.8 million in state tax revenues, and produced a direct annual economic impact of $79.2 million.

When the impact of tGen-generated business spin-offs and commercialization are included, the study shows, tGen in 2010 produced $25.04 for ever $1 invested, supported 1,124 jobs, generated $10.1 million in state tax revenues, and $137.7 million in total annual economic impact. “tGen has become a cornerstone of arizona’s biomedical industry, continuing to add great value to the state and thriving despite challenging economic conditions,” said bill post, recently retired Chairman and CeO of pinnacle West Capital Corp. and recently appointed Chairman of the tGen board of Directors.

With the healthcare and bioscience fields more intertwined than ever, experts expect to see a shift toward interdisciplinary research and translational medicine.

20 AB | November-December 2012

“as a result, we expect to see the healthcare and bioscience sectors grow significantly for construction, potentially to 50 percent of our annual revenue,” DpR’s Kirkland said. “In addition, we anticipate a strong bioscience influence to higher education as universities strive to compete with each other to provide state-of-the-art teaching and training facilities for future researchers and medical professionals. additionally, the increasing use of super computers, digital records and remote or cloud data storage, to house information, will create a positive impact to the advanced technology and data center side of our business.”

Illustrating the increasing call for new bioscience construction projects and hoping to duplicate tGen’s success, Stanton announced plans earlier this years for a second bioscience campus, built on 600 acres surrounding Mayo Clinic in phoenix.

“We want to maximize the use of the land around Mayo to create the highest number of good jobs,” Stanton said. “This first decade of bioscience research has built a solid foundation. We have the building blocks in place. We now need to push forward into a new phase.

If we leverage this opportunity correctly, we can create sustainable long-term economic dividends for our kids, and for their kids.”

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AzTECH: HEAT

It taKeS

FUel tO WIn the RaCe having access to angel investors, venture capital and private equity as well as debt instruments is critical to arizona’s success

m

any of us can relate to thinking of arizona’s economy as an automobile race. to win, you need a smooth race course, a fast car, a winning driver and high-powered fuel.

Carrying that analogy into arizona’s technology sector, it’s clear that a lot of resources have been invested and progress has been made in building a world-class race course. We’ve made tremendous strides in creating a business climate and technology environment for facilitating both private and public sector support to address the needs of arizona’s technology businesses.

The arizona technology Council has worked collaboratively with many different technology champions to build this course. technology issues are supported by the Governor’s office, the state’s legislature, the arizona Commerce authority, the arizona Chamber of Commerce and Industry, and more. technology incubators and shared space facilities such as Gangplank in Chandler, avondale and tucson; hackspace and venture Catalyst at aSU’s SkySong in Scottsdale; bioInspire in peoria; Innovation Incubator in Chandler; azCI in tucson; and aZ Disruptors in Scottsdale are making sure that today’s innovators are being given the right support, tools and environment to create the next big thing.

Collectively, our wins have included the passage of a tax credit for qualified research and development that is the best in the nation, the creation of the first statewide arizona Scitech Festival and the birth of the arizona Innovation Institute, to name a few. arizona’s technology industry also has great race cars. These are the technologies and intellectual property that create wealth and jobs driven by both Fortune 500 companies and entrepreneurs.

Companies such as Intel, Microchip technologies, Freescale, On Semiconductor and avnet can all be found here. nearly all of the largest aerospace and defense prime contractors in the nation are located in arizona, including boeing, honeywell, lockheed Martin, northrop Grumman and General Dynamics.

The state’s entrepreneurial spirit is reflected in companies such as Webpt, Infusionsoft, axosoft, ilinc and Go Daddy that were founded in arizona along with the many innovators that are com22 AB | November-December 2012

ing to the table every day with new ideas rich in technology.

These companies large and small are driven by some of the greatest race car drivers the nation has produced. but when it comes to fuel, arizona’s economy has always been running close to empty. We lack the vital capital needed to win the race. having access to angel investors, venture capital and private equity as well as debt instruments is critical to arizona’s success.

STEVEn G. ZyLSTRA The situation has not been improvTech Columnist ing on the equity side of the fuel equation. to offer some relief, the arizona technology Council is proposing legislation that would create a system of contingent tax credits to incentivize both instate and out-of-state investors to capitalize arizona companies.

This program, called the arizona Fund of Funds, would allow the state to offer $100 million in tax incentives to minimize the risk for those seeking to invest in high-growth companies. The state government’s role would be to serve as a guarantor through these contingent tax credits in case the investments don’t yield the projected results. expect more information on this important piece of legislation as it advances.

On the debt side of the fuel equation, there are encouraging signs that the worst of the credit crunch may be over. early-stage companies need access to debt instruments, or loans. Capital is needed for equipment and expansion. a line of credit can help early-stage companies through ongoing cash-flow issues. but loan activity is still modest in arizona for small companies. It remains heavily weighted toward the strongest corporate and consumer borrowers.

Capital goes hand in hand with innovation, high-paying jobs and cutting-edge technology, products and services. before arizona’s economy can win the race, we will need to become more self-sufficient at providing the fuel necessary to be a winner.

Steven G. Zylstra is president and CEO of the Arizona Technology Council.

602.247.7600