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August 22, 2011

Host: Ted Simons

Closing Borders Books

  |   Video
  • Gayle Shanks, the founder and co-owner of Changing Hands Bookstore in Tempe, talks about talk about how the closing of Borders book stores may impact the book-selling marketplace.
  • Gayle Shanks - Founder and Co-Owner of Changing Hands Bookstore
Category: Business/Economy   |   Keywords: books, changing hands bookstore, culture,

View Transcript
Ted Simons: The closing of Borders Bookstores is giving smaller independent booksellers an opportunity for growth and change. Here to talk about that is Gayle Shanks, founder and co-owner of Changing Hands Bookstore in Tempe. Always good to see you, thanks for joining us.

Gayle Shanks: So good to see you, too.

Ted Simons: The impact of Borders closing on your store?

Gayle Shanks: You know, we don't know yet. It's just happened within the last couple of months. But what we're finding is that already a lot of the Borders customers who no longer have a neighborhood bookstore are coming to our store. And, we're very excited about that. We've felt since Borders started opening in the 1990s, one store after the next after the next, that it was way too much bookselling retail space for the number of readers in the Valley. And so we were kind of waiting to see, was it going to be Barnes & Noble that was going to be the king of the mountain or was it going to be Borders that was the king of the mountain? And curiously enough, it's now Barnes & Noble and Borders are gone but We think that the balance is now going to shift to the place where there is the right amount of bookstores for the number of people and the number of readers. And we're very excited about it.

Ted Simons: The market will adjust, in other words.

Gayle Shanks: It's adjusting, it is adjusting.

Ted Simons: Changing Hands, for long time Valley residents, was an institution on Mill Avenue and it seemed as though Borders, and I don’t know maybe you know more about this than you may even want to tell us, but it seems as though Borders targeted your store and may have targeted other independent bookstores in trying to find a place to do business. Ran you guys out of Mill Avenue. Is that somewhat accurate?

Gayle Shanks: It's pretty close to accurate. Borders did that all over the country. You know, you talk about karma and it's kind of like, okay, you tried this it didn't work and Changing Hands is still around. But we were negotiating for the exact same space that Borders actually moved into on Mill Avenue. And, we just couldn't get the deal that the landowner was willing to give to Borders. And so that’s when we decided to open our second store on McClintock and Guadalupe.

Ted Simons: Which is doing very well?

Gayle Shanks: It’s doing very well.
Ted Simons: How is it doing well in a time of E-readers and a time of Amazon online, the whole nine yards? How are you guys surviving, how are you guys flourishing?

Gayle Shanks: Well, we are surviving and we are flourishing, and we're very excited about that. We feel like book selling is more than just the physical book. We know that people can buy books anywhere, what we give people when they come into our store is an environment, a place to relax, a place to talk about books with passionate book to school sellers, a place to find the next thing they want to read. A place to bring their children to, to teach their kids about books. And a place to meet authors. We have found over the years that providing that kind of third place is what people come to us for, at the same time they are coming to us for books. It's a dual thing. You can buy a book on Amazon, but it's just a book. When you come to Changing Hands, you buy a book but you have a conversation, you have some kind of connection with someone who’s in the same aisle looking at books along with you. You have a chance to talk to an author who's there. So it's the experience more than it is the actual book that you've come in to look for.

Ted Simons: How does -- Well, how did and perhaps continues to do so, the impact of E-readers, the impact of online, the “Amazon’s” of the world, how much of an impact has that made, and how much has that made you have to change what you do?

Gayle Shanks: You know, we change every day. My byword at this moment is “mutate”. I just feel like I wake up in the morning and I think, okay, we have to evolve and mutate into something else. E-books forced us, one more time, to look at what we were doing and how we were doing it, and how we were going to deal with people reading more on their readers. But, 64 million Americans read at least five hours a week. That's a lot of people reading. It's good if they are reading on their E-readers because they’re reading. It's better for a bookstore like mine if they are reading with a physical book, or if they buy any book from us. Independent bookstores in this country can now sell Google E-books. We are selling Google E-books. The only thing we can’t sell an E-book for, the only device we can't sell it for is an Amazon Kindle. Every other device, you can buy a book at Changing Hands, the same way you can buy a book off our shelves, you can buy a book off our website.

Ted Simons: Does the demise of Borders suggest that second hand bookstores, you sell new and used -- it started off only as used only though. Will we see more of these little mom and pop things popping up here and there, used only bookstores? As you say, you can get an iPad or a Kindle and never touch a book for the rest of your life. But those who do like to pass them on, there could be a market there.

Gayle Shanks: That's right. I think there are many, many, many used bookstores in the country that are flourishing right now. And, Changing Hands started, as you say, a used bookstore. We love our used books, we love the idea that people can come in and recycle their books and get credit. They can buy a used book, a new book, they can buy a solari bell with their credit. We love that idea of recycling. We started out in the 1970s thinking about alternative living and sustainability, and low and behold, here we are in 2011 and people are talking about sustainability and ecology and recycling. And so, we've never lost our love for used books, and I think there are lots of stores in the country that are going to thrive on being able to recycle those books as well.

Ted Simons: You mentioned the solari bells. You sell games, and toys and back to school supplies- it's more than just a bookstore. When does a bookstore threaten to become something different? Because when you started, I remember your store on Mill Avenue- it was a bookstore. It was books and maybe some cards here and there, but books. You store now you've got a lot of things in there. When is the other stuff too much and you lose that bookstore ambience character?

Gayle Shanks: Oh, I hope never. One thing that the gifts and sidelines that we carry do, they allow us to keep all of those books that we love on our shelves, because the profit in some of the gift items is higher than the profit is in books. It's kind of this fine balance that we walk. We love the idea that Changing Hands can be a one-stop shopping experience for people. So we're always trying to come up with new things that they can see when they come in the store that will become an impulse or a gift. You have a birthday, just about everybody has a birthday just about every day that they need to buy a present for. Sometimes, if you don't know if someone is a reader, you often know that they like a certain kind of lotion or a toy if it's a child. That's one area that we've really expanded dramatically, our kid's books and our kids' toys. We're encouraging parents to come and buy birthday presents for instance on the weekend, when they go to these birthday parties buy them at Changing Hands as opposed to one of the big box stores.

Ted Simons: Last question before you go- for those who say bookstores will soon be a rarity that, like record stores and other things you can get online that eventually they’re just going to go the way of the dinosaur, how do you respond to that?

Gayle Shanks: I want to tell you I think there have been bookstores for 5,000 years and there’s going to be bookstores for another 5,000. I think book are icons of our culture. They really hold all of the information that we have as a culture inside in those words. And I think words are crucial to us as society, sharing those words is part of who we are as human beings. I don't think they are ever going to go away.

Ted Simons: Gayle, good to see you.

Gayle Shanks: It’s really nice to see you, too, thank you.

Metro Phoenix Business Climate

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  • Business executives whose companies have recently established a presence in Metro Phoenix talk about the region’s strengths and weaknesses. Guests include Doug Schendt, Power-One; Scott Jenkins, Chief Financial Officer for DIRTT Environmental Solutions and Barry Broome, president and CEO of the Greater Phoenix Economic Council.
  • Doug Schendt - Power-One
  • Scott Jenkins - Chief Financial Officer for DIRTT Environmental Solutions
  • Barry Broome - president and CEO of the Greater Phoenix Economic Council
Category: Business/Economy   |   Keywords: business, economy, phoenix,

View Transcript
Ted Simons: Companies that chose to expand in the valley are an important measure of the area’s business climate and tonight we hear from two companies that recently made that move. Power-On, the world’s second largest manufacturer of solar powered inverters, opened a state of the art design and manufacturing facility in Phoenix earlier this year. And Dirtt Environmental Solutions recently did the same. Dirtt designs and manufactures green building products for commercial interiors. Joining me now to talk about the strengths and weaknesses of the Valley's business climate are Doug Schendt, Vice President of Technical Operations for Power-One, Scott Jenkins, Chief Financial Officer for Dirtt Environmental Solutions, and Barry Broome, President and CEO of the Greater Phoenix Economic Council. Good to have you all here, thanks for joining us. Alright, Doug let’s start with Power-One, talk to us about your company, its base originally started in California?

Doug Schendt: It’s currently headquartered in California, a publicly traded company.

Ted Simons: What do you do, and what got you here?

Doug Schendt: Actually the company started in 1973, selling power management solutions. We're still in that business. We got into renewable energy in 2006 in Europe and that’s where we've really seen growth in the business. Last year we did a billion dollars for the first time ever as a company. 70% of that was in renewable energy, 30% in power solutions. So we're looking to expand the company globally. Last year we opened sites not only in Phoenix but in Canada and in China to support the regional growth in those areas.

Ted Simons: Why Phoenix?

Doug Schendt: Phoenix, well it’s an interesting story. We started with about 14 sites in the U.S., through a number of criteria, the Power-One with a consulting company that we used, we narrowed that down to the first selection, eight different states in sites, final selection three states and three sites, and obviously the final choice was Phoenix. A lot of factor around that- incentives, market proximity, real estate availability, resources, those types of things. A long list of things that were sorted through in the criteria, and certainly PEC was a part of helping us make that decision. A lot of Q&A setting up incentives, meeting government officials, real estate people, contractors, so GPEC was right with us through all of that.

Ted Simons: Scott, describe your company. Canadian-based, correct?

Scott Jenkins: Canadian headquartered but we like to think of ourselves as a North American company. Calgary, Canada serves as our home base. Founded in 2005, so we're a young company growing very, very fast, not quite as big as Power-One but we hope to get there in the next 20 years, sales of about $120 million annually. Our second U.S. location is right here in Phoenix, we actually expanded to Savannah, Georgia, in 2009. For us, very similar to Power-One, access to markets. For us, 30% of our market is within 500 miles of the Greater Phoenix area. For us, we looked at the southwest to add to our southeast U.S. facility that has now more than doubled. When we spoke with GPEC and they introduced to us some of the local business leaders, members of the Canada-Arizona business council, some local officials, the case for Phoenix and the whole Valley became quite compelling.

Ted Simons: Barry, these two companies, obviously your group targeted them, found possible success with them, got that success. What did you see? Why were they targeted?

Barry Broome: Well, this is very interesting. When we built the solar platform and we've tried to help people understand that this is really about sustainability your carbon free industries. So Power-One is a major supplier to the solar industry. But it's also a major supplier to the renewable industry in wind. It's a company, if you heard the growth, 70% of its growth in 2006 has been in this renewable space and it’s now done a billion in sales, I think they are the number two publicly traded company in the world in this space. We're looking forward to the headquarters following them into the market. But also Dirtt is, you know, basically going to play a big role in making construction and materials in the construction industry. You have a solar market, a renewable market which is also growing in Arizona. You also eventually, sooner rather than later I hope, will go back to being a major construction-based industry. You will now have Dirrt being able to supply technical expertise to the construction industry and how that's more sustainable. Both of these companies, that are growing in the space that we’ve targeted in, one out of California and one out, Canada is a major objective of GPEC in the region. And of course California is a major objective. Both of those companies came together in a nice timely fashion.

Ted Simons: You mentioned criteria and a checklist, you’ve kind of narrowed things down final three, these sorts of things. A lot of folks in Arizona, we're like everyone else, we've got some economic issues here and folks are seeing services and things cut back. The quality of life issue, obviously incentives play a big part, business climate, growth plays as big part. What about quality of life? How seriously does a company look at something like that?

Doug Schendt: It’s something we’ve looked at. It's certainly on our list and it plays as big role. We've targeted people from Arizona and the Phoenix area as employees. A few of us have relocated to be here. It's all been possible for everybody. I think that the people that are here are real happy with the quality of life. I know the people in California like to come here too.

Ted Simons: Same question for you. We hear obviously there are business concerns and it sounds like those concerns were met. What about the vague sort of concerns?

Scott Jenkins: Well, for us, one of the attractive factors for the Valley, the greater Valley, is access to skilled labor. Like we were talking about, we're manufacturing sustainable construction solution for the commercial markets and we need some talented people. There's a lot of skilled labor in this market and good young folks willing to work hard. It's easy for us to attract skilled workers. We take a lot of pride in our sort of corporate culture, feeding our employees every day, bringing people through our plant and showing it off and having a lot of pride what they do and what we do, and that fits well with the Greater Phoenix kind of civic culture, as well.

Ted Simons: An educated and skilled workforce sometimes gets lost in all the numbers and the bottom lines. How important is that factor?

Barry Broome: I'll tell you the Power-One story. There were a couple of things in quality of life, one of the senior executives on the Power-One site selection team had lived in Scottsdale in the 1980’s for several years. He was looking at- do I want to live in Scottsdale or Dallas? He had lived in Scottsdale and had a greatly experience here. It was really nip and tuck because we were convincing the company that this was a big solar market but they were looking at Texas, which had a big wind market, and we started to go back and forth, is the wind market or the solar market going to be a bigger future? What was the differentiating point was the value proposition that came out of Arizona State University. It was almost a coin toss. We brought the technologists out of Arizona State University, and what led to the company coming here was what they thought was some of the compelling research coming out of Arizona State University. In Dirtt's case a lot of it was the two-year technical talent that we could deliver out of the community colleges. Maricopa Community College was a big talent delivery system for Dirrt. We had some compelling research opportunities with Arizona State University that was compelling for Power-One. Sometimes you're in a really even decisions and something like an exciting story at Arizona State or Maricopa Community College can be the difference between turning it your way.

Ted Simons: Now that you're here, now that you see the landscape, now that you're working, what would you like to see the state do to improve after attractiveness to business?

Doug Schendt: There are a couple things. We've had a little bit of a challenge when it comes to finding people with high-power, heavy-power experience. A lot of people with power experience in the region, but not typically testing the types of loads that we're doing. And you know, we're getting help on the next one, the incentive programs right there. A bit difficult to navigate. We've been learning a lot about them, GPEC certainly helped us, the people at the Arizona Commerce already helped us, the governor's office, and they’re seeing some things that we’re seeing and looking at streamlining some things, so it would be very beneficial.

Ted Simons: Very quickly, what would you like to see?

Scott Jenkins: We’d like actually for the state officials for their own facilities to continue to keep moving along and making their own facilities sustainable and moving out with civic facilities and make Arizona a true hotbed of sustainability. We're trying to take conventional construction and flip it on its head. We want to see that done right here now that it's our home.

Ted Simons: Alright, very good gentlemen great discussion great to have you here.

Rural Energy

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  • The Obama Administration will be giving grants to help small businesses, ranchers and farmers in Arizona install renewable energy systems or make energy efficient improvements. Ten Arizona rural businesses will be given the Rural Energy for America Program grants. Arizona State Director for Rural Development Alan Stephens will discuss the grants.
  • Alan Stephens - Arizona State Director for Rural Development
Category: Energy   |   Keywords: energy, rural, development,

View Transcript
Ted Simons: Good evening, and welcome to "Horizon," I'm Ted Simons. The Obama administration plans to offer grants to help small businesses, ranchers and farmers improve energy efficiency, including the installation of renewable energy systems. Here to talk about the "Rural Energy for America" program and how it impacts Arizona is Alan Stephens, the state director for rural development. Good to see you, thanks for joining us.

Alan Stephens: Thanks for having me on.

Ted Simons: Did I get that right? What exactly is this program all about?

Alan Stephens: This program started in the 2002 Farm Bill legislation. It's been picking up steam in the Obama administration. It's designed to try to increase the access to renewable energy, energy efficiency systems and reduce our independence on foreign oil, with particular emphasis in rural America, with sometimes rural communities don't get the same kind of attention by some of the companies that are selling these renewable energy systems.

Ted Simons: How do we define rural America? How do we define rural Arizona?

Alan Stephens: Generally, rural Arizona are communities outside the metropolitan areas of Phoenix and Tucson, communities of less than 50,000. We're not talking Flagstaff here, but a community in Prescott Valley, for instance.

Ted Simmons: What size grants are we talking about?

Alan Stephens: Well there are two categories and the President and Secretary of Agriculture Thomas Vilsack just announced those grants across the country for less than $20,000. It’s a system of $80,000 where the grants is $20,00 and then the small business or rancher has to come up with the remaining 75%.

Ted Simons: Interesting. Are there guidelines we need to know about for this, especially those who might think they might qualify in the rural areas?

Alan Stephens: We can fund programs that deal with solar energy, which are all the ones in Arizona, which you would expect, given the amount of sun we have here. But also geothermal systems dealing with wind energy, and then energy conservation techniques like lighting, insulation on windows, doors, high efficiency air-conditioning systems. Those are the kind of things that we can fund. The company again gets a $20,000 grant as maximum for these programs and then has to come up with the remaining $60,000. Many of these companies that we've funded, this reduces their operating costs, which allows them to retain the jobs that they have now, or hire new people so it’s really a kind of a job stimulate.

Ted Simons: And for Arizona, how many grants are we talking about?

Alan Stephens: We just made 10 grants for the smaller level and we will announce in the near future the larger grants.

Ted Simons: Are these Grants, are these loan guarantees? A little bit of both, how does this work?

Alan Stephens: These are all grants, we do not have loan guarantees in Arizona. People either choose to self-fund or look at another financial institution for the remaining 75%.

Ted Simmons: You mentioned that this program began in 2002 but seems to be picking up steam a little bit here. That means that we've had experience in the past, regarding they call it REAP I guess it’s the acronym for it, experience in Arizona in the past or just other examples you can give us and let us know what we’re talking about?

Alan Stephens: It's picking up in Arizona. We've had the most applications this year that we’ve ever had. We did a pretty sizeable outreach effort throughout the year. The way the program works, people can submit applications all year long and we fund them usually in the spring.

Ted Simons: Okay. Are there examples in the past of folks who have received grants, received loan guarantees, and how they have developed since then?

Alan Stephens: Sure. A small business owner from a vitamin store in Douglas, Arizona, a couple of years ago we funded a grant of about $37,000 for about $150,000 system; he came up with the rest, actually through a loan guarantee through a local bank in the area. He was able to save over 80% of his electric bill. He was able to qualify for an electric rebate through his electric company. And then also he was able to qualify for a federal tax rebate. He did very well. He created a lot of operating capital for himself by reducing his electric costs.

Ted Simons: In this economic environment though where you have to find money, the government will help you, the program assists you, but you still have to find the money to get this thing going. How difficult is that?

Alan Stephens: It's very difficult. That’s why a lot of small businesses today aren't able to apply, because they may not have the available resources to come up with the remaining 75%. This is a great designed to leverage other resources to bring renewable energy, the benefits of renewable energy, into rural America.

Ted Simons: Is it more difficult when it comes to something "experimental," like renewable energy, as opposed to something more concrete as retrofitting windows and these kinds of things?

Alan Stephens: Actually, we have more interest in the renewable energy side, particularly in the solar. Arizona, many people say we should be the solar capital of the United States, so I think a lot of people look at solar first and see how much they can afford and how much they can save.

Ted Simons: Interesting. This kind of focus, this kind of concentration on rural businesses, whatever the business is, the focus again seems to be on small towns, small outlying areas. Why is that so important?

Alan Stephens: Well, particularly from the standpoint of communities that may not have access to a lot of the contractors and a lot of the businesses that are now engaged in installing these kinds of systems, and sometimes the banks don't look as kindly in rural America as urban America, simply because they may not meet the initial credit test, et cetera. This is an attempt to try to bring the same opportunity to urban America has, Arizona in this case, to the rest of the state.

Ted Simons: Allow them to get that kind of leverage and get it going?

Alan Stephens: Right. And again, it’s going to create jobs in rural communities. And of course, we all know that many parts of rural America are suffering a little bit more than urban America right now.

Ted Simons: What kind of timetable are we looking at here in terms of getting the grants out there, getting the grants accepted, and then moving ahead with development?

Alan Stephens: Basically it'll take you a month or two, maybe three, to do the research and work with us to put together that initial grant. But then again I said once a year we fund them. So you've got now about nine months to when we really start funding them the next time around in 2012.

Ted Simons: Do you figure a deluge of applicants for these?

Alan Stephens: Well we hope so. We almost probably increased by 40% the number of applications this year, and we’d like to do the same next year.

Ted Simons: Alright, very good. Alan, thanks for joining us.

Alan Stephens: Thank you very much.