Tucson courting high-value manufacturing jobs

Every day across the Tucson area, local factory workers are busy making everything from missiles to medical instruments, from archery equipment to dinnerware.

And soon, Tucson could become a center for manufacturing of advanced batteries, even as a shift to electric vehicles and on-site energy storage accelerates.

Local business and government leaders are focused on growing manufacturing jobs, which continue to be highly sought because of their relatively high pay, capital investment and outsized contribution to local economic output.

Manufacturing jobs accounted for 7% of all jobs in Tucson in 2019, ranking it sixth among sectors behind government at 19.9%; education and health services; trade, transportation and utilities; professional and business services; and leisure and hospitality.

But in 2019, manufacturing generated 13.8% of the area’s gross domestic product, largely because of average annual wages of $92,786 per worker, which was $22,866 above the national average, according the Making Action Possible Dashboard, a project of the Economic and Business Research Center at the University of Arizona.

That ranked manufacturing industry third, following financial activities and government, but the manufacturing share of Tucson’s GDP exceeded the national share of 10.9% in 2019.

The number of manufacturing jobs understates the relative importance of the industry because its productivity gains often generate output growth with less-than proportionate increases in jobs, said UA economist George Hammond, director of the UA Economic Business and Research Center.

Aerospace, defense focus

The local manufacturing sector includes several medium-size manufacturers including HF Coors, which has been making high-end dinnerware at a plant near the Cherrybell Post Office since 2003, and PSE Archery has been making bows and other equipment in Tucson since 1982.

But aerospace and defense manufacturing accounts for about half of Tucson’s manufacturing jobs, led by the region’s biggest employer, Raytheon Missiles & Defense with about 13,000 workers.

The sector is a major focus for local economic-development and government officials.

In 2007, Sun Corridor Inc., the Tucson region’s main economic development group, targeted four high-wage industry sectors for its business attraction and expansion efforts: aerospace and defense; renewable energy and mining; transportation and logistics; and bioscience and health care.

“Aerospace and defense is still the granddaddy of them all for us,” Sun Corridor President and CEO Joe Snell said. “Sometimes they’re weaker, but those four industry sectors that we identified back in 2007 have maintained their strength. That’s a good sign, but the biggest industry that shapes our economy on the recruiting side is still aerospace and defense.”

Besides Raytheon, the biggest aerospace and defense employers in the region are Ascent Aviation Services, Bombardier Aerospace, Mitsubishi Heavy Industries (which acquired part of Bombardier’s local maintenance operation in 2020), Meggitt Securaplane in Oro Valley, Honeywell Aerospace, Sargent Aerospace & Defense, Universal Avionics Systems, and World View Enterprises, a startup offering high-altitude balloons for research and future near-space tourism.

Manufacturers also are among the biggest employers in mining and natural resources and in biosciences and health care.

Snell said Tucson has carved out a growing niche in medical diagnostic manufacturing, which is led by Roche Tissue Diagnostics, which employs about 1,800 people making instruments and test kits at its main campus in Oro Valley and a recently expanded site in Marana.

Himanshu Parikh, vice president of global operations for Roche Tissue Diagnostics, said the new 60,000-square foot building allowed the company to move its instrument manufacturing line out of its Oro Valley campus to make room for more production of test-kit reagents there.

The company sells about 3,000 of its instruments annually, Parikh said.

He said the company hires a range of people from unskilled assembly workers who are trained on-site, to mid-level test techs with associate degrees, engineering grads from the UA and medical doctors and Ph.D.s.

“They often have some vocational skills, or two years at Pima Community college, but generally here you need to read and write English, have good work ethic and attention to detail,” Parikh said, adding that the company but has no problem attracting and keeping workers due to the company’s competitive pay and attractive benefits, including tuition assistance.

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Other local medical diagnostics makers include Accelerate Diagnostics, HTG Molecular Diagnostics, artificial heart maker SynCardia Systems, and Vante, which make equipment to seal medical tubing.

Shifting pipeline

In the mining space, heavy equipment maker Caterpillar built a new regional mining technology center in downtown Tucson that opened in 2019 and employs some 600 people, and it recently unveiled an all-electric haul truck and is developing a model sustainable mining site at its proving ground in Green Valley.

Marana-based FLSmidth makes mining equipment, and Hexagon and Modular make digital mine planning and operating systems.

Snell said that while aerospace remains a priority, other industries now form about half of Sun Corridor’s current pipeline of companies it is working to attract.

“What’s really shaping our pipeline right now, which is fascinating, is the industries of energy, semiconductor and automotive are exploding in our pipeline. They’re representing nearly half of the projects that were in some form or fashion, you know, manufacturing under those three industries.”

Battery boom

A recent example is American Battery Factory, a startup that, if successful, could employ 1,000 people making advanced lithium iron phosphate batteries on a county site south of the airport.

In December, the Pima County Board of Supervisors approved a lease for the Utah-based company, which plans to build a $1 billion “gigafactory” complex.

American Battery Factory, a spinoff of energy-storage systems maker Lion Energy, plans to produce lithium-iron-phosphate battery cells for home and commercial energy-storage systems at the county’s Aerospace Research Campus.

The company plans on building modular, fabric-covered “sprung structures” to house a highly automated cell production line that will be built in phases. Elon Musk’s Tesla has used similar structures to quickly ramp up production of its electric cars.

Tyler Horton, American Battery Factory chief financial officer, said the project is in the planning process with plans to break ground within the next few months and the company hopes to occupy the structure sometime in the second quarter of next year.

“We did a lot of homework on what infrastructure we needed, so we’re in a very good spot as far as how quickly we can build it,” Horton said.

Meanwhile, Sion Power Corp., a Tucson-based developer of next-generation lithium batteries, plans to double the size of its local operations as it rolls out new, high-energy batteries for electric vehicles.

Sion plans to expand into a 111,400-square-foot building at 6950 S. Country Club Road, while keeping its existing headquarters on East Elvira Road where more than 100 employees work.

The expansion is expected to be complete by 2026 and create more than 150 jobs.

Sion Power has been working on advanced lithium batteries for more than two decades and conducted research at the UA Tech Park on South Rita Road from 1995 to 2007, when it moved to the Elvira Road site.

Local officials say the two battery makers could help form an industry cluster in Tucson, citing the arrival of battery recycling operations in the Phoenix area and Eloy and the presence of luxury electric-car maker Lucid Motors in Casa Grande and Nikola Corp., which last year opened a battery plant for its electric trucks in Coolidge.