Economic growth and diversity have been helped along by the "favorable regulatory climate" that is a favorite of state boosters everywhere -- but that, in Arizona's case, seems more than just a cliche. This month, for instance, Arizona becomes only the third state in the nation to allow local banks to be owned by out-of-state institutions. The development has already touched off a wave of banking acquisitions, and the hope is that it will increase the pool of capital available to local companies. "I don't see how it will hurt," reflects James S. Lee, president of the Phoenix-based Thunderbird Bank, a leader in the small-company lending market. "Certainly the consumer will benefit from more competition in products and services. I don't know who'll go after the small-business market, but when you look at the rise of venture capital concerns here over the last three years, investment in growth companies seems like a pretty strong trend."
The reins on other capital sources have loosened as well, thanks in part to attitudinal changes within the securities division of the Arizona Corporation Commission. Stiffening its merit-review regulations in the early 1970s after a series of well-publicized bankrupticies, the local equivalent of the Securities and Exchange Commission once reflected the opinion that, as Gregory C. Michael puts it, "any Arizona company needing money [via public markets] must be run by a bunch of crooks."
Michael is vice-chairman of American Surgery Centers Corp., in Scottsdale (#29 on the 1986 INC. 100). "They took a very protective attitude toward the local citizenry," he explains, noting that ASC's initial offering of $2 million in 1980 was shielded from home-state investors for about 30 days -- precisely long enough for the value of the stock to triple. "Sometimes that hurts the same people it was supposed to help. But that mentality has really changed in the last four years. The venture capital's here, there's a more liberalized outlook, the governor [Bruce Babbitt, rumored to have his eye on the Democratic nationalticket] is very pro-business. . . . Right now, Arizona is a fantastic place to be in a start-up mode."
The state's position at the top of the 1986 INC. list is testament to that. Will it stay there or will it prove to be a flash in the pan? "We're a young state," points out Arizona's chief economist, Ed Sloat, "and young people do not move around haphazardly. They go where they think the opportunities are. What California was 20 years ago, Arizona is today."
GEORGIA: ALOFT ON THE ATLANTA AIRLIFT
Tim Titus can tell you about airplanes. Eight years ago he quit his job as national sales promotional manager for Coca-Cola Co. ("a great company to work for, but I'd become an expert, and when you're an expert in a company as big as Coke, you're effectively retired"), started his own specialty-products firm in his basement, and began logging a lot of air miles looking for accounts. The coupons were nice, he says, but the frequent flying didn't always prove cost-effective.
"When you walk in blind to a company like Anheuser-Busch," remembers Titus, "it can take a long, long time before they'll buy anything from you. I must've made 20 trips to St. Louis before I closed my first sale, and that ate up a hell of a lot of cash."
Now that his company, Markatron Inc; in Norcross, has taken off (twice on the INC. 500, it currently has annual sales of about $5 million), Titus doesn't work the friendly skies quite so much anymore, even though success has still left him strapped for working capital. Instead, he stays near Markatron's parent city -- Atlanta, hub of the Southeast, cradle of the New South, and the main turbine driving Georgia's economic engine.
"The way manufacturing's going, it can be done almost anywhere in the world," posits Titus, sitting in an office adorned with samples of his product line: coolers, mirrors, jewelry, and dozens of other collectibles stamped with the familiar logos of Budweiser and Coke. "The real survivors will be [marketing firms] that package and distribute the merchandise, and that just plays to our strength down here. Atlanta will become the home base for more and more distribution companies that thrive on the advantages of this transportation system."
Already, it's home to more and more people. Black and white, foreigner and native, they are migrating to the South's most socially and racially integrated city in record numbers (over 90,000 new Atlantans last year alone). That influx has helped Georgia, the economic darling of Dixie, to spawn 425,000 new jobs over the past four years. So great is the stream of opportunity-seekers that Atlanta, blessed with an absence of natural boundaries, may someday metamorphose into one solid city all the way to Lake Lanier, 50 miles to the north.
To Gov. Joe Frank Harris, the evolution of his state's economy from an agricultural to an industrial base is as broad and straight as the runway at Hartsfield Airport -- and as cosmoplitan in its implications. "This state has always been aggressive about bringing foreign business here. There are 30 international banks in Atlanta alone [half a decade ago there were only 5] and about 60,000 Georgians employed by foreign firms." But, he adds, "We've [also] had excellent success getting small and midsize companies to come here and grow with us -- in fact, 60% of our growth comes from companies started right here."
Harris's fellow politician-with-a-passport, Atlanta mayor Andrew Young, is already known as the only municipal CEO with a fully developed foreign policy. But Harris, Young, and their colleagues must be doing something right: in 1985, 20% of the 219 companies locating in metropolitan Atlanta had overseas addresses. Georgia's public-education system, boosted by last year's $1-billion legislative commitment, is rapidly spawning a research network of national renown at its upper ends. "There's been a tenfold increase in funded research here," notes Dennis Hayes of Hayes Microcomputer. "I interview engineers who say they don't know if they can come here, because we don't have a technical community. Well, we do. And our universities are getting stronger in disciplines like information systems and marketing, areas you have to be able to draw on when you're in the business of developing growth companies."
