Tucson's New Economy

Optics Valley:
Can Tucson stay king of the hill?

Photos by Benjie Sanders / Staff

High-tech gear surrounds Michael M. Morrell at NP Photonics. The industry faces domestic and global challenges.
By Alan D. Fischer

Tucson's optics industry is widely considered the best in the nation, with a vibrant company base, enviable business-to-business cooperation and top educational opportunities.

But optics, government and education leaders agree they must do more to keep Tucson's Optics Valley No. 1.

The local industry - which is low-polluting, high-paying and pumps more than $650 million a year into the local economy - faces challenges from domestic and international competitors, which are trying to overtake Tucson by luring optics firms from here and other areas.

Supporters are working hard to make sure the industry - dubbed "Optics Valley" in 1992 by Business Week Magazine - stays ahead:

* The University of Arizona is spending $17.5 million to expand its Optical Sciences Center doctoral program, one of only two in the nation.

* In the past year almost $1 million in government funding has helped expand seven local high-tech clusters, including optics, through which businesses work together to grow their industries.

* New training programs are helping to fill jobs.

* Venture capital is emerging to launch new optics firms, often spinoffs from the UA.

* Agencies like the Arizona Department of Commerce and the Greater Tucson Economic Council are recruiting optics firms to move here.

Those efforts must continue - and grow, said Dick Powell, president of the Optical Society of America and the UA's vice president of research.

"It's an enormous threat and challenge," Powell said. "We want to maintain our leadership and still be better than anyone else."

Foundation of "new economy"

Optics touch your life in more ways than you might imagine. It's not just telescope lenses and mirrors, although they play an important role in research and business activity here. Area optics operations design, develop and manufacture products ranging from auto headlights to X-ray machines to high-speed Internet connections.

"Without optics, you don't have the 'new economy,' " Powell said. "Optics is now being used for almost everything - from checking out at the supermarket to laser surgery."

The industry has grown significantly in recent years and is expected to get even bigger, said Brian C. Catts, director of the industry relations program at the UA Office of Economic Development. Statewide optics employment grew 81 percent in five years, from 3,818 in 1995 to 6,907 last year, he said. Pima County accounted for 4,573 - 66 percent - of state optics jobs in 2000, he said.

The state has about 150 optics-related firms, 90 percent of which are in the private sector and account for estimated annual revenues last year of about $650 million, Catts said. That's up from $100 million in 1989 and $300 million in 1994.

Early emphasis on astronomy

Early optics activity here focused on astronomy. Stargazers at the Steward Observatory and other facilities needed optical equipment, and companies sprang up to fill those needs.

So in the early 1960s, when the space race created a need for optical scientists, Tucson stepped up. With the backing of the Air Force Institute of Technology and the Optical Society of America, the UA Optical Sciences Center was established in 1964 and has established a national reputation for excellence.

The program attracts top instructors and students. It and the University of Rochester in New York offer the nation's only doctoral programs in optics, said Valerie Vance-Goff, co-chair of the Arizona Optics Industry Association.

"There is no question it has been a catalyst for growth," said Jim Wyant, the center's director. "Graduates have started companies. And companies have opened here, or moved here, because it is easier to hire optical engineers here than in most places."

Wyant himself is a locally grown optics success. He founded the WYKO Corp. in 1982 while on the UA faculty, and sold it in 1997. Now Veeco Metrology Group, the company makes devices that test the shape and roughness of surfaces to ensure they meet precise specifications.

"The UA is so massive with the optics industry - they can do the engineering, development and manufacturing," said Tim Kanavel of the Arizona Department of Commerce. "You just need to come up with an idea. You can do it all right here."

The program's 30 graduates a year fall far short of the number of skilled workers the industry requires, said the UA's Powell, who headed the Optical Sciences Center from 1992 to 1998. Graduates with doctorates in optical science can expect to start at about $100,000 a year.

"We've had a single company come in, and they wanted to hire 200 graduates," Powell said. "We could increase the number of graduates by a factor of 10 and not have trouble finding jobs for them."

To boost local graduates:

* A $17.5-million expansion is in the works for the Optical Sciences Center.

* Proposition 301, which voters approved last November, will provide sales-tax funding for education.

* Pima Community College has launched a program to train optics technicians.

Like this expert, Tucson has displayed a deft touch with optics. But now challengers are trying to lure away the top companies.

Can't rest on laurels

Despite the local industry's strengths, experts say the area must work hard to retain its title as the nation's optics capital.

Other areas are aggressively challenging Tucson's role as the nation's optics capital, Powell said. Boston has invested $80 million in a new photonics center, and Florida is spending millions of dollars to attract companies and develop local talent.

Colorado; Austin, Texas; and Vancouver, British Columbia, all are pumping money and effort into boosting optics education and luring optics firms - often with economic incentives.

"It's very hard to compete against programs where the state government is putting a lot of money in," Powell said. "If we don't get the resources we need to keep our program going, they will bypass us."

That could be devastating, said Wyant, director of the Optical Sciences Center: "If we don't do something within the next two or three years, it's all gone."

To keep that from happening, Tucson must attract a major optics company, Wyant said. "If we could bring in a single company with 1,000 workers, then others will follow," he said.

Tucson's largest employer with optics ties is Raytheon Missile Systems, with 10,149 workers. By comparison, Eastman Kodak Co. has 26,500 people at its Rochester facility. The area also must expand current efforts, industry leaders said.

For example, the Arizona Department of Commerce and the Greater Tucson Economic Council are recruiting established optics firms and local venture-capital groups are offering funding for optics start-ups.

Also, state, county and local support is increasing. During the current fiscal year, which ends in June, Southern Arizona's seven high-tech clusters, which include optics, have received $700,000 in state funding, $140,000 from the city, and $136,000 from the county, Vance-Goff said.

"Prior to this fiscal year, we had received absolutely nothing," she said.

The money can be used for marketing and image-building, technology transfer, work-force development, telecom infrastructure and local supply chain development.

"This is exactly what we need to be doing," Powell said. "It's an enormous step in the right direction."

* Contact Star Business reporter Alan D. Fischer at 573-4175 or at afischer@azstarnet.com.

Profile: Bob Breault  |  Next cluster: Plastics

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Optics at a glance

Number of local companies:
about 150

Number of local employees:
about 4,573

Annual private-sector revenues:
$650 million

Tucson optics links

  • Arizona Optics Industry Association (AOIA)
  • University of Arizona Optical Sciences Center
  • Tucson Section of the Optical Society of America
  • Greater Tucson Economic Council: Optics cluster

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