Is The Sun Setting In The West?;

Is trouble in the air for Arizona? Number one for the second year in a row, Arizona is already watching its electronics manufacturers move across the border for lower wages. "We are very vulnerable because many of our major employers are branch plants, not headquarters, and many of them are now expanding offshore," says Ioanna T. Morfessis, executive director of Phoenix Economic Growth Corp. In fact, more than 70% of Arizona's high-tech workers are employed by 14 companies, only one of which is headquartered in the state.

Any serious erosion in Arizona's manufacturing base would also affect its "local market economy," the thousands of smaller businesses, such as pizza joints, accountants' offices, and construction companies, that feed off the manufacturing base. When the recent slump in semiconductors forced job cutbacks, construction in turn slowed and Arizona's unemployment rate jumped two percentage points. The state's fate may now hang on how quickly its small but active technology start-ups can take up the slack.

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