Path: bloom-picayune.mit.edu!enterpoop.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.bonus,americast.usa-today.bonus From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: bonus Fri, Sep 11 1992 Date: Fri, 11 Sep 92 04:33:18 EDT Message-ID: Lines: 153 09-11 0000 BONUS: Arizona looks to the future USA TODAY Update Sept. 11-13, 1992 Source: USA TODAY:Gannett National Information Network The recession in Arizona was milder than in other parts of the country. And the economy is showing signs of improvement. They may be impatient, but they have been luckier than many. Unemployment in Phoenix and Tucson, where 83% of the population live, was down to 5% in July from a January peak of 8.7%. HOW CAN ARIZONANS TELL THE ECONOMY IS IMPROVING? More of David and Kathy Heininger's friends have steady jobs these days. That's one way they know that Arizona's economy is getting better. Another sign: In May, the Heiningers sold a renovated historic house here for $100,000 the first week it was listed. The couple bought the house for $27,000 six months earlier and put another $40,000 into improvements. "Now if we could only do that four or five more times this year. ... There's a sense of cautious optimism in the air," says David, a stocky, sun-tanned former chef who moved here from Maine 10 years ago. "It's about time." WHAT HAS SPARKED ARIZONA'S EARLY RECOVERY? An emerging Mexican economy is stimulating office and warehouse development along the state's 345-mile border with Mexico. And that's just a start. People and businesses from California and elsewhere are fleeing high costs and congestion to come to Arizona. This week, Hughes Aircraft said it was moving at least 2,000 jobs from Pomona, Calif., to Tucson. Sears has said it is considering building a Discover Card processing office in Phoenix - which would mean about 4,000 jobs. WHAT PROBLEMS HAS THE ECONOMY EXPERIENCED? Despite the activity, economists describe the state as struggling. Arizona is still recuperating from a construction boom that went bust in early 1987. "No two ways about it, the construction industry was devastated," says Mark DeMichele, president and CEO of Arizona Public Service, an electric utility that serves 45% of the state's population. Double-digit vacancy rates plague many office buildings and industrial parks in the state's two largest cities, Phoenix and Tucson. WHAT CONDITIONS DID THE BOOM BRING ABOUT? Signs of the damage from that real-estate collapse are still easy to find on Camelback Road - six wide lanes that run in a straight line from suburban Tempe to downtown Phoenix . Every mile reveals another empty or boarded-up furniture, carpet or home-appliance store. It wasn't always like that. For decades, Arizona's tiny economy was dominated by the four C's - cotton, cattle, citrus and copper. WHAT NEW BUSINESS THRIVES IN ARIZONA? Citrus and copper are still big business, but cattle and cotton have declined, overshadowed by tourism, manufacturing and the flood of retirees brought to the state by the advent of affordable air conditioning in the 1950s. Manufacturers also were attracted by the state's anti-regulatory frontier mentality, its open spaces and low-tax climate. Today, Arizona counts giant corporations such as Allied Signal, National Semiconductor and Motorola among its largest employers. DID ARIZONA'S POPULATION BOOM? Arizona's population doubled the past 20 years and the population of Phoenix and Tucson tripled as job seekers and sun-seeking retirees arrived. But there weren't enough people and businesses arriving to fill all the houses and office space built during the mid-1980s, before Congress repealed tax incentives for construction of office buildings and apartments. In the real-estate collapse, Arizona's savings and loans, which had financed the boom, were decimated. Six years ago, Arizona had 14 savings and loans. Today it has one. WHAT INDUSTRY DID NOT RECOVER? Arizona weathered those crises, but the end of the Cold War was a heavy blow to the state's manufacturers. More than 20,000 jobs - 10% of manufacturing jobs - have been lost the past 18 months as defense contractors such as McDonnell Douglas have cut back. In 1988, 15% of the labor force worked at factories. Today, that figure is down to 12%, and by 1994, it will slip to 11%, says Marshall Vest, an economist at the University of Arizona. WHERE DID THE DISPLACED MANUFACTURING WORKERS FIND JOBS? Many are working in the lower-paying services sector, says DeMichele, who heads the Greater Phoenix Economic Council. The past five years, Chase Manhattan, Security Pacific, BankAmerica and department-store chain Carter Hawley Hale have opened or begun building credit-card-processing centers in the state. Small telecommunications, biotechnology and medical-technology firms are springing up. And mom-and-pop operations such as the Heiningers' home-renovation business are common. HOW HAS PHOENIX EVOLVED? In Phoenix, rattlesnakes occasionally slither across Cadillac-filled parking lots. Jackrabbits run across cactus-lined streets, and skyscrapers melt into a backdrop of rugged mountains. The city now boasts its own stock exchange, the Phoenix Suns of the National Basketball Association and the Phoenix Cardinals of the National Football League, which moved there from St. Louis. All provide jobs as well as boosting civic pride. IS ARIZONA'S POPULATION GROWING AGAIN? One of the promising signs of economic recovery is that Arizona's population growth has picked up again. The state's growth in the booming '80s peaked at 5.1% in 1987, when the U.S. population grew only 0.9%. An early recession tied to the real-estate bust knocked Arizona down to 1.8% growth in 1990, but economists expect 2.1% growth this year and 2.4% next year. WHAT IS THE POPULATION FORECAST? "We'll add another million people and 500,000 jobs this decade," says Lee McPheeters, an economist at Arizona State University. "We've got slower growth now, but by the mid-1990s, we'll be the fastest-growing state." To help keep the growth going, a new state law offers tax breaks on construction materials and corporate taxes to defense companies that convert to other businesses. IS ARIZONA PLANNING FOR THE FUTURE? Next week, 35 Arizona officials and business owners are headed to Washington, D.C., to attend a conference designed to show businesses how to convert from defense work to peacetime commercial production. Clouding the short-term outlook is a newly negotiated free-trade agreement with Mexico. Economists say it will be good for Arizona's economy in the long term but painful in the short term as factory jobs are lost to cheaper Mexican labor. HOW DO ARIZONANS FEEL ABOUT THE TRADE AGREEMENT? Some Arizonans are taking the long view. "It's going to cost more jobs, but we'll get left behind if we don't trade more with Mexico," says Ernie Shortridge, owner of Shortridge Instruments in Phoenix, which makes equipment to test air conditioning. Then he smiles. "If the Mexican economy improves, they can spend more money on air conditioning, and air conditioning is my business." WHEN ALL IS SAID AND DONE, ARE CITIZENS BETTER OFF STAYING? Peter Lee and his family migrated to Phoenix from Los Angeles after Lee's wholesale handbag-importing business failed. He's shining shoes now but hopes to restart his business soon. "Right now, I worry about making a living, but I'm staying here in Arizona," Lee says. "Los Angeles has a lot of things, but the economy here is a lot more stable." Bonus Editor: Martin Baucom. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM