Tucson's economy is turning around, but more like a snake than an ocean liner - it may now be headed in the right direction, but part of it is still pointed the other way.
A panel of University of Arizona economists and analysts predicts the leading industrial sector for Tucson job growth in the coming year will be health services, which is forecast to add 3,900 new jobs.
Among other sectors projected to add jobs are leisure and hospitality (800 jobs), other services (700), trade (600) and financial services (200), according to the UA Eller College of Management's Economic and Business Research Center.
"Some sectors have already turned the corner, and employment is increasing in mining, manufacturing - primarily aerospace - financial activities, health services - which didn't decline during the recession - and employment services," said Marshall Vest, UA economist and chief of Economic and Business Research Center.
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Health care, a major employment sector, is grouped in the service category but is a major economic force. Projections call for it to be one of the leaders in the rebound. But even during the recession, large health-care employers such as the local hospital groups were hiring - they just weren't hiring as many workers as in the past.
Construction, a massive local economic driver during the building boom and the hardest-hit sector during the recession, is expected to rebound slowly and late.
Raytheon: good for now
The outlook for manufacturing is a mixed bag, said Justin Williams, director of the Tucson office of the Arizona Technology Council.
"Defense has done better than commercial aviation," Williams said. "Particularly, business aviation was hit pretty hard. They're starting to feel their way out of that slump."
Still, Williams said, businesses involved in the commercial side of aviation are still hurting. "I don't know whether it's less worse, or it's growing again." On the other hand, he said, "with wars coming to an end, things like defense commodities, that business is going to decline over time."
For now, things are good for Tucson-based Raytheon Missile Systems, Southern Arizona's biggest employer. The missile maker added 601 full-time-equivalent employees in 2009, as its annual sales rose to $5.6 billion.
Even industries that are coming around are not likely to go on a hiring binge if there's a way around it, Williams said.
"They don't know whether it's a temporary bump or not. And during that time they do more with less, either turn part-time people into full time, or you ask people to work overtime and longer hours," Williams said.
Oro Valley-based Ventana Medical Systems has continued to add jobs since its acquisition by Swiss drug giant Roche AG in 2008. The laboratory-instrument maker expanded its campus and added 171 positions last year, bringing its local employee count to 965.
Offsetting such gains are losses at manufacturers including Texas Instruments, whose payroll shrank from more than 600 workers in 2008 to 350 last year as it moved its semiconductor-chip manufacturing elsewhere.
Stimulus boosts jobs
While Vest said federal stimulus money is currently supporting thousands of local jobs, he added that many of them are in K-12 and higher education - jobs in which federal money is replacing local revenue shortfalls rather than creating new jobs. But he said there are also jobs in heavy construction, much of it road work, created with stimulus funds.
"Ominously," Vest said, "stimulus money is set to expire in a little over a year."
He didn't offer much hope for one of the local economy's major employment sectors: government.
The state, Pima County and Tucson - perennially among the Star 200's top dozen employers - continued to shed jobs in 2009, as did other Southern Arizona governments.
"Since public-sector revenues, taxes, lag behind the economy, the government sector will be the last to recover," Vest said. And "it will take years to repair the damage that has been, and is being, done to the public sector."
Mining rebound?
The first of Arizona's historical "Four C's" (copper, cotton, cattle and climate) has some potential for job growth as the price of copper holds steady around $3.40 a pound and looks like it's going higher, according to an industry analyst.
Yet the Star 200's biggest miner, Freeport McMoRan Copper & Gold, shed about 2,000 jobs in 2009, mainly at Morenci. Asarco, which emerged from bankruptcy reorganization in December 2009, dropped 450 jobs. The companies had ramped up payrolls in 2007 and 2008, when copper prices spiked before plunging in the fall of 2008.
George Leaming, owner of the Western Economic Analysis Center, said Southern Arizona's relatively small copper mines, even those owned by huge internationals, can ramp up production fairly quickly compared with huge mines.
And Leaming said that could happen with the price of copper trending upward toward $4 per pound.
"It got to $4 (a pound in mid-2008), and that's when a lot of development took place," he said.
It's not strictly a matter of demand. Leaming said the falling value of the U.S. dollar also has raised the price.
But heavy demand from China's industrial machine is the main force driving the price.
"The biggest candidate is for Freeport to put Morenci back into" high gear, Leaming said.
He said there are now about 7,000 workers employed in copper mining in Arizona.
Eller's Economic and Business Research Center has forecast statewide mining employment will drop 9.5 percent in 2010 and fall 3.4 percent in 2011 before rebounding by 1.4 percent in 2012. Mining employment in the Tucson area dropped an estimated 20 percent in 2009, to about 1,600 jobs, and is forecast to remain essentially flat in 2010 before rebounding in 2011, the UA center said.
Jobs outlook
For the latest jobs forecast from the University of Arizona Eller College of Management, go to http://ebr.eller.arizona.edu/DataEntry/Forecast.aspx
Contact reporter Dan Sorenson at 573-4185 or dsorenson@azstarnet.com
