“I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones.”
Phoenix’s top business recruiter warns the closure of Lockheed Martin’s plant in Goodyear could be just the tip of the iceberg when it comes to federal sequestration austerity cuts. And more cuts could do to Arizona’s defense and aerospace sectors what the decline ofMotorola did to the state’s semiconductor industry.
Greater Phoenix Economic CouncilPresident and CEO Barry Broome also warns Arizona could lose engineers and other skilled workers to other markets, especially low-tax Southern states, unless more high-wage and high-tech jobs are attracted to the state. “The real thing at risk is the talent,” Broome said.
Broome and Arizona Technology Councilpresident and CEO Steve Zylstra also worry defense contractors may favor other states when deciding on where to make austerity cuts. They feel other states have congressional delegations who sometimes lobby harder to avoid closures such as Lockheed in the West Valley. The defense giant announced Nov. 14 its closing a 600-worker, 590,000-square-foot plant in Goodyear as part of a wider 4,000-worker layoff.
“While our congressional delegation has many virtuous qualities, they have never been particularly adept at working together in advocating with federal government agencies for economic development issues and purposes, like the pending closure of Lockheed Martin in Goodyear,” Zylstra said.
Broome agrees. He said some other states — especially in the South — have congressional delegations lobbying defense firms not to make cuts on their home turf and advocating on their behalf in Washington. He notes that while Lockheed included a plant near El Paso, Texas in its closures only 11 jobs are being cut there compared with 600 in Goodyear.
Broome said unless new high-tech and high-wage jobs are brought in, workers impacted by defense cuts will look for jobs elsewhere.
“They’ll be in the South,” Broome said.
Valley mayors — including Phoenix’s Greg Stanton and Mesa’s Scott Smith — joined economic developers earlier this year in warning the federal austerity deal brokered by President Barack Obama and congressional Republicans could have dire impacts on the state’s defense sector.
Goodyear Mayor Georgia Lord said the Lockheed closure is due to sequestration and is the biggest impact so far on Arizona.
“Washington has to come to terms with their decision,” Lord said. “This is just the beginning of the federal government cutting back on defense.”
The austerity cuts total $500 billion over 10 years on the defense side. By comparison, the federal bailout of the U.S. auto industry totaled about $90 billion. Arizona has 2,000 defense firms with 43,000 workers. That includes General Dynamics in Scottsdale, Boeing in Mesa,Honeywell International in Phoenix and Glendale and Raytheon Missile Systems in Tucson.
Broome drew parallels between sequestration and when Arizona lost 23,000 semiconductor jobs from Motorola’s decline and reorganizations in the late 1990s and early 2000s. The state currently has 38,200 semiconductor and electronics workers, according to the Arizona Department of Administration. The state had 60,200 semiconductor workers in 1998, according to DOA.
The Semiconductor Industry Association reported in December Arizona has 18,800 semiconductor employees. The state had 34,900 in the same sector in 1997, according to the American Electronic Association. The industry has also seen globalization and the growth of Asian and other offshore markets move jobs out of the U.S.
The GPEC chief said his group will increase its targeting of software development, Internet and other new technology companies in an effort to ease the potential pains of sequestration. That comes on the heels of Apple Inc’s acquisition of First Solar’s failed Mesa production plant. Apple and a manufacturing partner will create 700 workers at the Mesa site.
Lockheed did not respond to a request for comment Monday on whether there were any political considerations in its plant closure. The Goodyear operations are being consolidated with a plant in Denver, the company said last week.
Mike Sunnucks writes about politics, law, airlines, sports business and the economy.
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I am a successful Commercial Investment Real Estate Broker in Arizona now for 15 years and I worked with banks and their commercial REO properties for 3 years. I am also a commercial landspecialist in Phoenix and a Landspecialist in Arizona.
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