Phoenix’s warningagainst 30-storycondo towers in

downtown Tempe is thewrong war in the wrongplace at the wrong time.But it’s difficult to seehow it can be avoided.

At issue is Avenue Com-munities’ Centerpoint proj-ect and whether it wouldpose a hazard to opera-tions at Sky Harbor Inter-national Airport. Phoenix officialsare concerned it does. But howcan they then be willing to sup-port more high-rises for down-town Phoenix? Tempe officials

see the bullying and hy-pocrisy they have longcomplained about fromthe colossus to theirwest. Recall the similarfight that killed the Cardi-nals stadium in Tempe.

The episode points tothe genuine differingagendas of the cities.Tempe is landlocked andwants to be more urban.Strong sales at the Hay-

den Ferry Lakeside project con-vinces developers that high-risedemand exists there.

TODAY’SBUZZ

THE ARIZONA REPUBLICmoney.azcentral.com

Kathy Tulumello, business editor, 602.444.NEWSor kathy.tulumello@arizonarepublic.com

BUSINESSBUSINESS

JonTalton

Republic columnist

Macy’s workers authorize strike: The union rep-resenting 3,500 workersat four Macy’s depart-ment stores, including the

flagship Herald Square location, has voted to au-thorize a strike if talks with store management failto resolve a contract dispute. D6

Nothing to sneeze at: A 58-patient study findsthat allergy suffer-ers may get morerelief from PfizerInc.’s Sudafed thanfrom Merck & Co.’sSingulair, which re-quires a prescrip-

tion and costs three times as much. D5

Bring out the little guns: Not too long ago, theworld’s automakers were engaged in a virtualarms race to satisfy the American public’s appe-tite for hulking sport utility vehicles. But Americanautomakers may now find themselves with toofew small vehicles in their arsenals. And Japan’sbig automakers stand to profit from galloping gasprices as they prepare to roll out a batch of fuel-efficient small vehicles.

GM workers capture last dayon film: Some workers broughtcameras to General MotorsCorp.’s Oklahoma plant to takephotographs before the last ve-hicle rolled off the line Monday.D6

Battling a $202 billion trade gap: A new federalget-tough approach with China could involve fil-ing trade charges against the Asian giant overauto parts and copyright piracy and branding theChinese as currency manipulators. D3

Rebel attacks spark crude hike: Oil prices risemore than $1.50 a barrel in response to violentmilitant action against oil pipelines in the NigerDelta that led to a 20 percent cut to Nigeria’s oilproduction. D3

Your 2 cents’ worth: Last month’s increase in theprice of stamps may not seem like a lot, but forbusinesses that rely on direct mail, those penniesadd up. D4

When an MBA is just not enough: Arizona StateUniversity will offer an online graduate dual-de-gree program in business and engineering. D4

IRS looking out for tax scams: Some Americanskeep trying creative ways to get out from undertheir tax liabilities. The Internal Revenue Servicecites these among scams that the agency has no-ticed lately:

■ Zero wages. In this scam, taxpayers attach totheir income-tax returns either a Form 4852(Substitute W-2) or a corrected Form 1099 show-ing little or no income. Sometimes, people includea statement indicating they’re contesting incomeinformation submitted to the IRS by employers orothers.

■ Form 843 tax abatement. Here, taxpayers useForm 843 in an attempt to reduce taxes assessedin earlier periods. Some people trying this haven’tfiled tax returns previously.

■ Phishing. Some con artists pose as IRS agentsor representatives of financial firms in an effort topersuade taxpayers to reveal personal informa-tion that they can use to access financial ac-counts.

■ Charity organizations. The IRS has noted risinguse of tax-exempt groups to shield income or as-sets from taxation improperly. This can happen,for example, when a person moves assets or in-come to a tax-exempt group but maintains con-trol.

■ Offshore transactions. Despite an IRS crack-down, some people keep trying to avoid U.S. taxesby illegally hiding income in offshore bank andbrokerage accounts or using offshore credit cardsor other forms of payment.

— Russ Wiles

More info at: mymoney.azcentral.com

Source: Compiled from wire and staff reports.

INTERNATIONAL

LOCAL & STATE

NATIONAL

YOUR BUSINESS

T U E S DAY , F E B R U A R Y 2 1 , 2 0 0 6 SECTION D

KEY DATA

By Max JarmanThe Arizona Republic

Honeywell’s Phoenix-basedaerospace division has received acontract worth up to $4 billion tosupply auxiliary power units forAirbus’ new long-range, wide-bodyA350 aircraft. It’s one of the largestcontracts the division has receivedin recent years.

The contract was to be an-nounced Monday at the Asian Aero-

space 2006 trade show in Singa-pore.

The HGT 1500 auxiliary powerunits will be manufactured at Hon-eywell facilities in the Phoenix areaover a period of years, companyspokesman Bill Reavis said. He was

unable to say what impact the con-tract could have on the size of Hon-eywell’s Arizona workforce, whichstands at about 13,400 people.

He said the contract will in-crease the volume of work at Hon-eywell’s Phoenix operations. The

$4 billion would include sales oforiginal equipment manufacturedby Honeywell and subsequent af-ter-market revenue over a 20-yearperiod, Reavis said.

The A350s, which can carry up to300 passengers, are scheduled fortest flights in 2008 and deliveriesstarting in 2010. The multinationalEuropean Airbus already has or-ders for 140 planes.

Honeywell gets $4 bil dealFirm to supply power unitsfor Airbus’ new A350 jets

See HONEYWELL Page D4

RadioShack Corp.’s embattled presidentand chief executive officer, David Ed-mondson, resigned Monday following

questions about his resume. The electronics re-tailer released a statement saying that itsboard accepted Edmondson’s resignation.

On Wednesday, the Fort Worth company saidit would hire outside lawyers to investigate er-rors in Edmondson’s resume, including claimsthat he earned two college degrees. The schoolhe attended has no such record. Edmondson said he took re-sponsibility for errors in the resume.

This news comes in the wake of last week’s earnings report,stating that the company’s fourth-quarter profit plunged 62percent. The company announced a restructuring that willclose up to 700 stores. It has about 60 stores in the Phoenix area.

— Associated Press

More Business Buzz, D2

RadioShackCEO resignsafterquestionsarise overhis resume

MARKETS

Dow Jones Nasdaq+3.71% +3.49%

11,115.32 2,282.36

Year-to-date results

Shopping-basket watch: U.S. financial mar-kets were closed Monday for Presidents Day.Investors will be watching a report on con-sumer prices on Wednesday and durable-goods orders on Friday.

— Associated Press

imaginationbuilders

By Betty BeardThe Arizona Republic

The housing market mayhave cooled but not the enthusi-asm for investing in Phoenixarea real estate.

About 1,000 investors andwould-be investors spent theweekendat Phoenix CivicPlazalearning how to find cheapproperties and then “fix andflip” them.

They came with differentbackgrounds and bank ac-counts, but all seemed eager tofind out more about what isconsidered one of the best waystofind strong returns oninvest-ment: Put your money andsweat equity into real estate.

A year of historic gains maybe behind investors in thePhoenix area, but that didn’t de-ter the crowds at the Real Es-tate Investors and LandlordsConference & Expo, wherethey heard tantalizing talesfrom investors who picked updistressed properties cheap,fixed them and resold them forsolid profits.

The fact that housing priceshave stabilized or even fallen insome areas and the number ofhomes for sale has risen signif-icantly in the past few monthsdidn’t seem to cool interest.

“It does affect the shortterm. I think the heat is going tocome out of the market a littlebit for not long and not much,”said Phoenix investor Dolfde Roos as he signed more than100 copies of his new book 52Homes in 52 Weeks about hissuccess investing in the LasVegas housing market. He wasthe featured speaker Saturdaynight at the event, sponsoredby the Arizona Real Estate In-vestors Association.

He said that even if hous-ing prices come down by 5 or10 percent, investors stillcame out ahead because theprices had grown by about40 percent last year in thePhoenix area.

“If it was the stock mar-

HOUSING MARKET

‘Fix, flip’crowdfired upWannabes eagerfor quick bucks

See HOUSING Page D2

By Jane LarsonThe Arizona Republic

Hoping to help doctors switchfrom manila folders to electronichealth records, a Valley healthcare consulting group is launchinga series of free training sessions onthe new technology.

Health Services AdvisoryGroup of Phoenix will offer an in-troduction to electronic health re-cords, or EHRs, on Feb. 28 and amore detailed “EHR University”from March through June. Thesessions are open to primary carephysicians and their staffers insmall to midsize practices.

The training is being offeredfree under the group’s contractwith the federal Centers for Medi-care and Medicaid Services. Thefirm runs the centers’ Doctors’ Of-fice Quality Information Technolo-gy, or DOQ-IT, program for Ari-zona, which promotes electronicrecords and improving quality ofpatient care.

“Doctors need help sortingthrough all of the available infor-mation,” said Scott Endsley, medi-cal director of system design atHealth Services Advisory Group.“EHRs will soon be an integral part

Group to train doctorson electronic records

See ELECTRONIC Page D2

TUESDAY NOTEBOOK

Phoenix wrong in fightover condos with Tempe

See TALTON Page D2

By Erica SagonThe Arizona Republic

For nearly a decade,Studio ProductionsInc. in Tempe hasquietly brought 200

Build-A-Bear Workshops tolife worldwide, turning draw-ings of store designs into thefamed 3-D environments thathave helped to make the cus-tom stuffed-animal retailer ahigh-profile and successfultoy company.

Now, Studio Productions,which has also crafted thelook and feel of board-gamestore Game Daze, art retailerPainted With Oil and collect-ibles shop Department 56, islaunching its own retail con-cept, Architecture Kids, a lineof backyard playhouses that

take the shapes of windmillsand pirate ships. Studio Pro-ductions plans to sell the play-houses in late spring at Valleymalls and eventually else-where.

Studio Productions prima-ry business is to create whim-sical and imaginative themestores for retailers who arelooking to differentiate them-selves in an increasingly com-petitive industry. Headed bypresident Dean Dwyer, 20-year-old Studio Productionshas also built elaborateChristmas decorations formalls and department stores,redefined auto showroomsand even created spiritualsculptures for churches.

All of the engineering, de-

ProjectsMattel Inc.: Designedand fabricated compa-ny’s Toy Fair Galleries.Build-A-Bear Workshop Inc.: Trans-lated brand into an in-teractive-selling envi-ronment to capture theimagination of childrenand adults.Game Daze: Uses a play-ful approach at this spe-cialty store with gamepieces and graphics.Fisher-Price: Developsstrategic branding identityfor Fisher-Price vendorstores.Department 56: Helpedthis collectible importer tobuild brand identity by de-signing, building and install-ing the retailer’s flagshipstore at Mall of America.

Success of Build-A-Bear conceptdrives Tempe company’s ventures

See IMAGINATION Page D4

Peter Shields (left) and Gerry Farrelly laminate Build-A-Bear Workshop sound stations at StudioProductions in Tempe. Studio Productions plans to launch a line of backyard playhouses this spring.

CHRISTINE KEITH/THE ARIZONA REPUBLIC

KNIGHT RIDDER TRIBUNESource: Jewelry Industry Research Institute

U.S. sales in billions

Diamond jewelry sales

20052004200320022001

$26.1 $27.4$31.4 $32.3

$29.1

Est.

D 4 T U E S DAY , F E B R U A R Y 2 1 , 2 0 0 6 T H E A R I Z O N A R E P U B L I C

ASU to offer dual degreein business, engineering

Beginning this summer, Ari-zona State University will offeran online graduate dual-degreeprogram in business and engi-neering. And the university hasturned to companies includingIntel, Raytheon, Boeing andGeneral Dynamics to help se-lect curricula for the program.

The program will give stu-dents the opportunity to earnboth a master’s degree in busi-ness administration from theW. P. Carey School of Businessand a master’s of science de-gree in engineering, with a fo-cus on electrical engineering,from the Ira A. Fulton School ofEngineering. The program istailored for working profes-sionals.

“It’s designed so studentscan earn the degrees in lesstime and at a lower cost thanpursuing both separately,” saidGerry Keim, associate dean ofthe W. P. Carey MBA program.“We expect to attract appli-cants not only from the high-tech community in the Phoenixarea but from across the na-tion.”

“This is an industry-drivenprogram. Our corporate part-ners helped us define it,” saidJeffrey Goss, assistant deanand executive director of theFulton School Center for Pro-fessional Development. “Theirengineers need advanced tech-nical education, but they alsoneed to be very strong in proj-ect management, financialmanagement and marketing.

The dual-degree program of-fers them the best of bothworlds.”

http://wpcarey.asu.edu/mba

Intel plans IT trainingcenter in the Gaza Strip

Intel, the world’s largestsemiconductor company, isplanning to build the first infor-mation technology educationcenter in the Gaza Strip.

The Intel Information Tech-nology Center of Excellence isintended to provide IT trainingto Palestinians and stimulatedevelopment of high-tech in-dustry in an area where half thelabor force is unemployed.

The center is being de-veloped in conjunction withWashington,D.C.-basedAmeri-can Near East Refugee Aidand the Islamic University ofGaza.

“We don’t want to discountthe tension in the area ... butfrom our perspective, we viewit as something that can have apositive impact,” Intel spokes-man Chuck Mulloy said.

www.webhere.com

New owners to keep hotelopen during renovations

Morgans Hotel Group Co.said Friday that the James Ho-tel in Scottsdale will stay openduring renovations this year.

The New York company re-ports it is buying the hotel for$47.5 million. If the deal closesin April as planned, Morganswill renovate and re-brand theproperty as a Mondrian by theend of the year.

Morgans also recently ac-quired a hotel in South MiamiBeach and plans to develop twomore in Las Vegas.

www.morganshotelgroup.com

Center’s liver transplantis first there in 4 years

A 51-year-old man from Tuc-son has received a liver trans-plant at University MedicalCenter in its first such opera-tion after a four-year hiatus.

UMC performed 170 livertransplants from 1992 to 2002,when its liver surgeon left. Theliver transplant program wasapproved for reactivation lastsummer by the United Net-work of Organ Sharing.

Dr. Ernesto Molmenti, whojoined UMC to perform pediat-ric and adult liver transplants,led the six-hour operation. Mol-menti, who had been at theJohns Hopkins UniversitySchool of Medicine, is a profes-sor of surgery and chief of ab-dominal transplantation at theUniversity of Arizona Collegeof Medicine.

www.azumc.com

Matrixx, Meritage pulldown Ariz. stock index

Arizona stocks fell Friday,led by Matrixx Initiatives Inc.and Meritage Homes Corp.

The Bloomberg Arizona In-dex, a price-weighted list ofcompanies with operations inthe region, fell 1.10 to 536.59.

Matrixx Initiatives fell 1.41to 22.71. Meritage Homes Corpfell 0.95 to 58.31.

In the broader market, theStandard & Poor’s 500 fell 2.14to 1,287.24. The Dow Jones in-dustrial average fell 5.36 to11,115.32.

The Bloomberg Arizona In-dex was developed with a basevalue of 100 as of Dec. 31, 1996.

Staff and wire reports.

VALLEY & STATE SundayGlobal linksMondaySmall businessTuesdayArizona economyWednesdayReal estateThursdayInnovatorsFridayTourismSaturdayWork & LifeARIZONA ECONOMYARIZONA ECONOMYARIZONA ECONOMYARIZONA ECONOMYARIZONA ECONOMY

Today’s focus:

Consumer-goods analyststo gather in Scottsdale

Most of Wall Street’s con-sumer, food, tobacco anddrinks company analysts willbe in the Valley this week forwhat is being called an increas-ingly important annual ritual:CAGNY, or the Consumer Ana-lysts Group of New York con-vention.

Nearly 1,000 brokers andportfolio managers are ex-pected to hear presentationsfrom consumer-familiar com-panies at its annual gatheringat the Hyatt Regency Scotts-dale Resort at Gainey Ranch.

Event participants soundlike a who’s who of major U.S.companies or maybe an inven-tory of most American kitchencupboards: Coca Cola, GeneralMills, ADM, McCormack,Kraft, Hershey, Tyson Foodsand many more.

Lockheed Martin winsgrant to train employees

Lockheed Martin Informa-tion and Technology Serviceshas been awarded an $872,182training grant from the Ari-zona Department of Com-merce.

The Arizona Job TrainingGrant will reimburse the com-pany for up to half the cost oftraining 117 employees over atwo-year period.

Lockheed Martin Informa-tion and Technology Servicesin Prescott Valley is the largestof its 15 facilities in the compa-ny’s Western service area. Ithouses an automated flightservices station, Flight Serv-ices Academy and the servicearea management team.

Lockheed Martin is openinga50,000-square-foot automatedflight service station in the BigSky Business Park in PrescottValley. It has outgrown its Pres-cott Airport location.

Leading economist joinsCommerce Department

A leading state economisthas been named to head the re-search division for the ArizonaDepartment of Commerce.

Kent Ennis, an economistformerly with the Joint Legis-lative Budget Committee, willalso assist in finance and in-vestment programs.

Ennis’ background is in eco-nomics and finance. He hasworked for the engineeringfirm CH2M Hill, where he wasthe senior economist in chargeof water resources in the West.Ennis has also served as econo-mist in the state comptroller’soffice in Austin.

Ennis has bachelor’s degreein economics from Universityof Texas-Austin and a master’sdegree from the London Schoolof Economics.

Index used to measurebusiness conditions falls

The Arizona Business Condi-tions Index dropped to 62.6 inJanuary, down from 69.7 theprevious month, according tothe W.P. Carey School of Busi-ness at Arizona State Univer-sity.

An index reading of 50 orhigher indicates that the localeconomy is growing.

ASU economists said that al-though theindex fell, it is still ina range that indicates local eco-nomic growth for the next sixmonths. The December indexfigure was at the upper end ofthe range that it has been atsince the middle of 2003.

NOTES

By Erin RyanArizona Woman

Two cents might not seem like a lot,but for businesses that rely on directmail to reach clients and prospectiveclients, the extra pennies you’ve had toshell out for stamps since last month’srate hike have started adding up.

The U.S. Postal Service delivers al-most 200 billion pieces of mail eachyear, and bulk business mail, compris-ing catalogs, advertising circulars anddirect-mail campaigns, makes up about60 percent of its revenue. Althoughbulk mail, media mail and mail sent bydesignated groups such as non-profitorganizations receive certain dis-counts, the 5.4 percent rate increase isaffecting most businesses.

“The increase in cost is obviously go-ing to be proportionate to the amount ofmail you do,” says Stephanie Hen-dricks, director of public affairs for theDirect Marketing Association. She saysthe USPS already plans for a double-digit rate increase in 2007.

Denise Pruitt, 39, a Realtor withScottsdale-based Arizona Best, sendsabout 200 cards a month to clients andprospective clients. She figures the in-crease in postage rates means her fixedcorrespondence cost will go up about$48 a year, but it’s not enough to changeher marketing strategy.

“It’s the primary way I contact myclients,” Pruitt says. “I’m not thrilledwith the fact that I have to pay a little bitmore, but it’s worth it to me. It’s an in-

vestment.”But others are being hit harder. “We

have over 3,000 volunteers, and wehave to send out preparation and evalu-ation materials that they will use in theclassroom,” says Marilyn Raigel, vice

president of development at JuniorAchievement of Arizona, a non-profitorganizationproviding youtheducationin career development. “We try to com-municate on e-mail whenever we can,but the information has to be mailed.And it’s more than just a business sizeenvelope; we’re talking manila pack-ages.”

Alternatives and adjustmentsWhen gas prices go up, people find

ways to drive less. To save on postage,many professionals, including Raigel,look to technology for solutions.

If the purpose is simply to keep intouch, an e-mailed newsletter mightwork just as well, says Kim Edwards,37, chief executive officer of Scotts-dale-based direct marketing firm KimConway and Associates.

If timing isn’t important, she recom-mends using third-class mail.

But for call-to-action mailings, Ed-wards says sophisticated databasemarketing tactics are highly effective.“Instead of (mailing to) every home in15 ZIP codes, we want to narrow it downto only certain households,” she says.

It’s easy to buy direct-mail lists ofprospective customers, but the highpostage costs mean accuracy mattersmore than ever. Above all, be sure thatthe names and addresses you’re usingfor direct mail are accurate and cur-rent, Edwards says.

This story originally appeared in theFebruary issue of Arizona Woman.

DENNIS BRACK/BLOOMBERG NEWS

The U.S. Postal Service delivers almost 200 billion pieces of mail each year, and bulk business mail makes up about 60 percent of itsrevenue. This year’s 2-cent increase and a planned rate hike next year are affecting how some businesses use mailings.

Making every stamp countDirect-mail campaigns can helpboost your business, but your expec-tations need to be realistic. Mass di-rect-mail campaigns yield a responserate of only 1/10 of a percent, but tar-geted campaigns can yield about 2 to3 percent. Here are some tips to getmore customers to respond to themail you send them:■ Give them something to act on.Otherwise your letter will go directlyto the trash.■ Start small. Be as targeted as pos-sible.■ Test your list. Is it up to date?■ If your budget is limited, usingfirst-class mail (stamps) may be awaste of money due to low direct-mail response rates.■ Ask customers how they heardabout you to track campaign effec-tiveness.■ Don’t stop at one mailing. Stay incontact.

Stamp hike puts squeezeon some organizations

The auxiliary power unitsare high-powered gas turbinesthat run aircraft pneumaticand electric systems. Thosesystems provide air-condition-ing, start the main engines andserveas abackuppower sourcefor flight systems and mechan-ics.

The HGT 1500 is the newestaddition to Honeywell’s portfo-lio of auxiliary power units forcommercial, business and mili-tary aircraft.

Reach the reporter atmax.jarman@arizonarepublic.com or (602) 444-7351.

Honeywell gets$4 billion deal

HONEYWELLContinued from D1

sign, sculpting, painting, building andpackaging is done at Studio Produc-tions’ facility tucked away on FarmerAvenue in Tempe. The company has 35employees.

Although Build-A-Bear WorkshopInc. makes up a bulk of Studio Produc-tions’ business today and is certainlythe company’s most well-known work,Studio Productions got its start design-ing Mattel galleries to display at toyfairs. The company has also builtFisher-Price boutiques inside FAOSchwartz stores.

The Architecture Kids conceptstemmed from Dwyer’s work with ma-jor toy corporations.

“It was an inspiration from workingwith child products and creating envi-ronments andbranding strategies overthe course of 20 years,” Dwyer said.

He also hopes to tap into the success-ful formula for Build-A-Bear. The com-pany’s fourth-quarter income rose 68percent due to new stores and Internetsales. Build-A-Bear reported$301.7 million in revenue in 2004.

“People have sold teddy bears in ev-ery single way,” Dwyer said. “ButBuild-A-Bear has presenteditself inof-fering teddy bears in a new and differ-ent way. We’re paralleling that.”

Studio Productions has been key tothe success of Build-A Bear Work-shops, said Maxine Clark, chief execu-tive officer of Build-A-Bear Work-

shops, based in St. Louis, Mo.“Our store is about an experience,”

Clark said. “We wanted our store to belike a theme park in the mall, and that’sreally what they’ve helped us create.”

Clark said the cost of building a storetoday has dropped 50 percent since thefirst store was custom-built in 1997 inSt. Louis, Mo. Production has becomemore efficient at Dwyer’s company.This year, Studio Productions willbuild more than 60 new Build-A-BearWorkshops, including 30 internation-ally.

“If you take a look at Build-A-Bear,they really have the design elementsthat make it look like a fun place toshop,” said Steve Helm, senior prop-erty manager for Scottsdale FashionSquare, which has a Build-A-Bearstore. “It creates an ambiance that isvery complimentary … to the mer-chandise that they sell. It makes youwant to go in and see what it’s allabout.”

Studio Productions has recently tak-en that concept and applied it to cardealerships, redefining showrooms bybuilding themed environments to tar-get different customers.

For the Avondale Toyota showroom,Studio Productions designed the Sciondepartment as a hip hangout to attractyounger buyers.

Designers gave the Prius area a Zenfeeling and built a forest and treehousearound the truck stage. The companysays it has other showrooms in theworks.

Company builds on creativityIMAGINATION

Continued from D1

CHRISTINE KEITH/THE ARIZONA REPUBLIC

“People have sold teddy bears inevery single way. … But Build-A-Bearhas presented itself in offering teddybears in a new and different way.”

Dean DwyerPresident of Studio Productions