The downturn in manufacturing has placed the Illawarra economy at a crossroads, according to a new economic study which finds ‘‘real challenges’’ for the area in the near future.The NSW Government has released an economic profile which shows the area’s transformation from a blue-collar economy to one that is increasingly service-based.The Illawarra economy is something of a ‘‘mixed bag’’ according to the report, with some sectors reporting strong growth while manufacturing remains under pressure.‘‘The region has focused on diversification, towards a more service-oriented economy, in which knowledge and information and communication technologies play a key role,’’ the report says.‘‘The last decade or so has been a time of substantial economic readjustment for the Illawarra.’’Technology and communications are being earmarked as the next boom sector in the Illawarra, backed by the University of Wollongong which pumps out more IT graduates than any other university in the country.The industry, however, only employs about 1800 individuals in Wollongong, well short of mature industries such as manufacturing which employees more than 13,000 people.Andrew Byron, business development manager with Wollongong IT company Panaconnect, said IT companies were growing in the Illawarra and increasingly servicing clients across the country.‘‘We are now getting national contracts, and a lot more contracts, which take in entire company networks,’’ he said.He also said the IT industry was maturing and offering increasingly sophisticated services.‘‘There are a lot more IT savvy people around trying to offer communication packages and IT services,’’ he said.The report looks at the development of the Illawarra over the past 10 years. During that time it has been mining that has experienced the biggest growth rate, with employment increasing from 1500 in 2001 to 4700 today - an increase of 311 per cent.The figure reflects the devastation caused by the 1980s downturn in the mining industry, which kept employment low until about 2001.However, the commodities boom over the past decade had sparked a spectacular increase in jobs.