Published: 01.05.2004
By Tim Steller
ARIZONA DAILY STAR
The great outdoors drove Arizona's economy in the 20th century, but like the
rest of the country, our biggest industries are moving inside.
The "Five C's," as the state's economic engines were called, will
remain part of Arizona's future for decades to come. One of them - climate -
is still a powerhouse for the state, while the other four - copper, cotton,
cattle and citrus - are reduced to minor ingredients in an alphabet soup of
industries such as business services, aerospace, health care, transportation
and technology.
Most of those 21st-century industries are growing here and elsewhere, gradually
making the state's economy more like the nation's. Arizona's sunny climate,
which helps fuel continued growth in tourism and growth-related industries such
as construction, will be one of the state's relatively few uniquely regional
economic characteristics.
"The urban areas have already become very similar to the national economy
and are going to become more so," said Tracy Clark, an economist at the
W.P. Carey School of Business at Arizona State University. "The national
economy tends to be very service-oriented, very information-oriented."
The service sector accounted for about 12 percent of Arizona jobs in 1929, a
figure that swelled to 29 percent in 2001. That same year, 31 percent of the
national labor force worked in the service sector - so many that economists
switched to a job-classification system that breaks down the service sector
into more detailed categories.
In addition to services, other sectors that already have replaced the old, extractive
industries in terms of statewide prominence include manufacturing of electronic
components, aerospace and defense. Future dominant players include health care
and related biotechnology, transportation and warehousing, and high-technology,
economists say, though they disagree which technological sectors will soar.
Arizona's climate should help the state expand some of those emerging sectors,
predicted Bob Treadway, a futurist and forecaster who lives in Washington state
and San Diego.
"High-income jobs will continue to disappear into the neighborhoods of
Tucson," Treadway said via e-mail. "As long as an individual can get
to an airport with reasonable ease and their skills are marketable and not location-dependent,
that person will choose where they live with an eye to lifestyle, not location.
Arizona looks like an inviting place."
Gilbert M. Segovia couldn't imagine such a shift in Arizona's economy while
welding earthmovers during his 34 years at the Phelps Dodge copper mine in Morenci.
But Segovia, now 89, knew he didn't want his children working 26 days on for
two days off, as he did during most of his career.
"I'm glad they can work a five-day week," Segovia said last week,
taking in an old-timers baseball game at Morris Udall Park.
Not only can his son, Arnold P. Segovia, take weekends off, but he also can
enjoy some job security in one of the state's largest, most promising industries.
In 1976, Segovia earned a bachelor's degree in industrial engineering, and he
now works as a supervisor in the Maverick missile program at Raytheon Missile
Systems.
Arnold Segovia's industry of choice - aerospace - is the high-technology industry
in which Arizona has the greatest concentration of jobs compared with the rest
of the country. In 2001, Arizona had three times the proportion of aerospace
jobs as the national work force, according to a study released in September
by the Carey school.
By contrast, mining jobs - once a symbol of Arizona's economy - now make up
about the same proportion of jobs here as they do nationally.
In the Tucson area in November, aerospace manufacturing accounted for 11,800
jobs - 27,400, or 1.08 percent of jobs statewide - while mining accounted for
1,400 jobs - 8,500, or 0.33 percent of jobs statewide, according to the Arizona
Department of Economic Security
Current events make it likely Arizona will maintain its position in aerospace
and the related defense industry, Clark said.
"Given the way the international situation is going, there's going to be
a steady stream of spending on defense-related goods, and that's going to boost
some firms in Arizona," he said.
Such a development likely would benefit two generations of Segovias. Arnold's
son, Gilbert A. Segovia, also works at Raytheon, in supply-chain management,
but he is studying to take advantage of the next wave of technological developments.
Segovia, 31, is pursuing a bachelor's degree in business from the University
of Phoenix with an emphasis on e-business. The idea, he said, is to use the
Internet to manage processes like the supply chain he works on at Raytheon.
"It's potentially useful pretty much anywhere," he said. "I wanted
to make myself marketable in case I needed to do something outside of the defense
industry."
He will be marketable, if current trends hold. University of Arizona economist
Marshall Vest points to professional and business services - the category in
which computer services fits - as one of the area's strongest job categories.
Global Insight, an economic forecasting firm based in Waltham, Mass., projects
that in the Tucson area, jobs in professional and business services will grow
by about 5 percent per year through 2010.
That's something Tucson businesswoman Carol Ritter is banking on. Ritter owns
a local franchise of the Pridestaff employment agency. Such firms supply more
than 40 percent of the jobs in the business services subcategory, according
to a report on Arizona's economic future prepared last year for the state Commerce
Department by Economy.com.
Ritter's employees work entirely in white-collar positions - administrative,
accounting and information technology, among other areas, she said. Insurance
is too expensive for the physical-labor jobs, Ritter explained.
"I think what a lot of employers are looking for is a more flexible work
force," she said. "As we come out of a recession, a lot of employers
tend to bring temporary employees on to fill their production demands."
A big question as Arizona moves from economic recovery to expansion is which
high-technology businesses will boom.
Bob Hagen, chairman of the Southern Arizona Tech Council, points to three areas
with great potential for growth in the next five to 10 years. Advanced communications,
advanced manufacturing, and optics and photonics look promising over the short
term, he said.
Looking forward 10 to 15 years, Arizona's biotechnology industry may hit its
stride, Hagen predicted. But that won't necessarily translate into high employment.
"High-tech sectors don't really have many employees, but they continue
to increase productivity, so their dollar impact continues to grow," said
Tom Rex, research manager at the Center for Business Research in ASU's Carey
school.
In 2001, high-tech businesses employed about 8 percent of Arizona's 1.9 million
private-sector workers, according to the September study by the Carey school.
Those businesses had a payroll of $54,383 per employee, as opposed to $28,564
per employee in all other private-sector businesses.
The opposite could be said of another one of Arizona's growing sectors - retail
trade. The number of employees in retail trade rivals the professional and business
services category in the Tucson area, at around 40,000.
But because the jobs pay relatively little, and because the industry tends to
recycle money already in the economy, Rex said, the retail trade's impact on
the state economy is disproportionately small.
* Contact reporter Tim Steller at 434-4086 or at steller@azstarnet.com.