Arizona’s high-tech industry held its own in terms of employment and wages in 2007 despite the onset of a global slowdown that has forced some of the state’s biggest tech firms to make major cuts, according to a report released today.
The report, by Washington, D.C.-based TechAmerica, does not capture the impact of recent layoffs by large technology firms, nor the potential for additional job losses because of possible defense budget cuts by the federal government.
Still, Cyberstates 2009 paints a less dire picture of the state’s technology landscape than a study released in February by Science Foundation Arizona. That report, which included sectors other than high-tech employment such as biotechnology and life sciences, said employment declines in Arizona’s technology industry accelerated faster than the national average in 2007.
The state’s high-tech industry employed 115,989 workers in 2007, down 0.7 percent from 2006, the Cyberstates report said. That made Arizona No. 18 for high-tech employment among the 50 states, the District of Columbia and Puerto Rico.
The average annual high-tech salary in Arizona fell 0.6 percent in 2007 to $75,884, putting the state at No. 19 in the category, according to the report.
Nationally, high-tech employment grew 1.4 percent to 5.8 million, and the average annual salary increased 2 percent to $83,334 in 2007, the report said.
“We’re not doing as poorly as some states, but we’re not doing as well as some states either,” said Jim Garnett, executive director for TechAmerica in Arizona and New Mexico.
The trade group’s findings are based on U.S. Bureau of Labor Statistics data. The report includes job categories defined by the North American Industry Classification System, including high-tech categories such as semiconductors, defense electronics, communication equipment, software publishing and engineering services.
As in prior years, the state ranked high for employment in certain high-tech categories.
Arizona ranked fourth for semiconductor manufacturing with 22,643 jobs; sixth for defense-electronics manufacturing with 8,416 jobs and eighth for photonics manufacturing with 1,045 jobs.
While the report indicates Arizona experienced only minor slips compared with other states in employment and salaries, it does not capture the impact that recent downsizing by several large tech firms has had on the industry.
Semiconductor manufacturers including Intel Corp., Freescale Semiconductor Inc., ON Semiconductor Corp. and STMicroelectronics have recently laid off workers locally and internationally to trim costs amid dwindling demand for electronic chips used in computers, automobiles and consumer electronics.
Steven Zylstra, president and chief executive officer of the Phoenix-based Arizona Technology Council, said his group’s members are “generally optimistic” about future prospects despite the cuts.
“We’re looking at another year of this,” Zylstra said. “Starting in the fourth quarter and into 2010 they’re anticipating things will be turning (around).”
Some local tech consultants say the recent cuts could actually be a boon to the local startup community, prompting experienced engineers who worked at bigger companies to start their own businesses.
Derek Neighbors, co-founder of the Gilbert-based technology incubator Gangplank, said he is already seeing people from companies such as Motorola and Intel turn to the group to start consulting firms and new technology ventures.
“They’re kind of excited to explore opportunities that they’ve been thinking about for a number of years . . . and now are kind of forced into pursuing them,” Neighbors said.
Increased government spending on new military weapons, defense hardware components and software systems has helped Arizona’s high-tech industry in recent years.
But speculation about possible cuts in spending by the Obama administration for certain defense technology also throws into question how the industry will be affected.
Scottsdale-based General Dynamics C4 Systems, which develops networking systems and hardware components for the military, is one of the few local tech firms that continue to hire despite the slow economy.
The company, a subsidiary of Falls Church, Va.-based General Dynamics Corp., recently hired 31 engineers at a local job fair in January. The company has about 300 openings nationwide, including about 70 in Scottsdale, said Rich Skelnik, director of talent acquisition and community relations.
Typically salaries for the company’s engineering positions range from $65,000 to $110,000, he added.