Arizona Manufacturing Faces Mixed Future

April 28, 2014

A new report highlights how manufacturing has changed in Phoenix over the last year, and what could happen as the industry comes out of the recession. The report from Jones Lang LaSalle is generally positive: The housing market is stabilizing while retail and entertainment are making more money. But it does not paint a pretty picture for manufacturing - an sector where 1,500 jobs were lost over the last year.

Anthony Lydon is managing director for the group that released the report. He said it’s low-tech manufacturing that’s suffering. High tech will make Phoenix a robust industrial environment in the coming years, he said.

“We have had some closures, I think some of that has been old world industrial, and that’s been replaced by some of the high-technology related manufacturing,” Lydon said. “A good example of that would be the recent Apple commitment, and then the recent further investment by Intel in their plant and equipment in Chandler.”

Early this month, Gov. Jan Brewer signed a measure that exempts manufacturing firms from electricity and natural gas taxes in an effort to attract more of those firms to the state. Lydon also said Mexico is on the threshold of becoming the world’s No. 1 manufacturer. As its primary trade partner, Lydon said Arizona will benefit from that increased manufacturing.

“China has moved about 300 million people into the middle class. So now a qualified employee in China is very comparable to a qualified employee in Mexico, so there’s no longer a labor advantage,” Lydon said.

Mexico has 42 trade agreements, more than any other country in the world. China has 12 trade agreements.