New Mexico as a whole has been struggling for decades to diversify its economy, wean itself off of federal government spending and reducing its heavy reliance on the oil and gas industry where the state gets nearly 40% of its revenue from. When the oil and gas industry booms, New Mexico becomes flush with money and when it busts, the state revenues plummet causing financial crisis.
There are 10 sectors or industries that have been identified by the Governor Lujan Administration that have the best shot at diversifying New Mexico’s economy. Those industries are:
Film & Television
Aerospace
Intelligent Manufacturing
Global Trade
Value Added Agriculture
Cyber-Security
Bio-Sciences
Sustainable Energy
Outdoor Recreation
Recreational Cannabis And Hemp Industries
AREAS TARGETED FOR ECONOMIC DEVELOPMENT
During the last two years, some significant progress has been made by the Lujan Grisham Administration in diversifying New Mexico’s economy in 5 of the 9 areas targeted by the state for economic development. The progress in those areas is worth noting:
FILM & TELEVISION
Over the last 20 years, the film and television industry has steadily grown and been one of the few bright spots for the state, especially during the great recession, when it comes to economic development and diversifying the state’s economy which is very dependent on federal spending.
The New Mexico Film Office reports that in in 2003 the industry had direct spending in New Mexico was $7 million. In fiscal year 2019, direct spending reached a record high of $525.5 million. According to state estimates, Netflix will generate an estimated $344 million in taxes to the state, local school districts, and other local governments.
It was in 2019 that the film industry began to seriously emerge to be one of the biggest hopes for Albuquerque and New Mexico to diversify both the city and states economies. The unmistakable evidence was the immense investment in the city and state by NBC Universal and the Netflix purchase of Albuquerque studios as the site of a new production hub. Both announced NBC and Netflix announced opening film production facilities in Albuquerque.
NETFLEX DEAL AND EXPANSION
On October 8, 2018, it was announced that Netflix was buying Albuquerque Studios. The State contributed $10 million of Local Economic Development Act funds. The City of Albuquerque contributed another $4.5 million of Local Economic Development Funds. Albuquerque beat out other places such as Denver, Salt Lake City, Austin, New York, Georgia and Los Angeles. The Albuquerque site will be Netflix’s first hub purchased in the United States. Albuquerque Studios is an enormous complex that includes 9 sound stages, a backlot and management offices. New Mexico’s other 4 production studios are I-25 Studios, Garson Studios, Santa Fe Studios and Las Cruces Studios as other productions seek studio space for their projects.
https://www.abqjournal.com/1230755/netflix-to-buy-abq-studios.html
https://www.krqe.com/news/new-mexico/netflix-buys-albuquerque-studios/1507392854
Originally it was estimated that at least 1,000 well-paying jobs per year will be created. The jobs will run the gamut of film and TV production work, most of which is project-based contract labor. Many of the jobs are expected to pay $70,000 a year. The purchase deal also calls for $1 billion worth of production spent over 10 years which will have a dramatic effect on the City and State economies.
On November 23, 2020, it was reported that Netflix will be expanding its presence in New Mexico by more than 10 times as it already exists by adding 300 acres to its existing 30-acre property located at Mesa Del Sol at the South border of the City. Netflex said it intends to make Albuquerque its North American production headquarters. The expansion comes a mere two years after the media giant purchased the ABQ Studios.
THE NBC DEAL
On July 22, 2019, NBC Universal announce it would open a studio in Albuquerque as part of a 10-year venture. The media giant took over and renovated and created sound stages at a vacant industrial building south of I-40 on Commercial Street, north of downtown in the vicinity of historic Martinez town. The media giant is expected to provide more than 330 full-time jobs year-round at the film studio.
NBC Universal employees earn about $58,000 a year which is a far cry from the minimum wage jobs the city is use to announcing with the arrival of new businesses. The studio operation is projected to generate an economic impact of $1.1 billion over a 10-year period.
The state’s Economic Development Department is providing $7.7 million through the Local Economic Development Act (LEDA) to the redevelopment and production commitment. The City of Albuquerque will provide another $3 million from its LEDA fund which was approved by the Albuquerque City Council on June 17, 2019 by a unanimous vote.
AEROSPACE
State officials are encouraged between the Spaceport and companies like Virgin Galactic moving forward with test flights. State officials say there’s even more companies on the way.
On Thursday, November 12, 2020, the City of Albuquerque Environmental Planning Commission approved the new site plan for the “Orion Center.” It is an aerospace and technology facility that will be built on the 122-acre plot of land located between Kirtland Air Force Base and Albuquerque International Sunport. “Group Orion”, the developer, is a subsidiary of Theia Group Inc., a Washington D.C. based, privately held aerospace company. The Theia Group is attempting to develop a network of satellites to digitally image and collect data on the physical world, providing solutions in areas from logistics to biology.
The mass area acreage was originally where the North-South airport runway was located. The land has now been designated for industrial development by the city. In 2017 after the runway was removed, the City named the acreage as the “Aviation Center for Excellence”. The city began to offer the vacant land area for commercial and office developers . According to Nyika Allen, Albuquerque’s Director of Aviation, the city began working with “Group Orion” in late 2018.
During the November 12th press conference announcing the development, Albuquerque Economic Development Director Synthia Jaramillo said the Orion Project represents a real opportunity to attract development from the commercial space industry. According to Jaramillo:
“The global space economy is projected to be worth $3 trillion by 2045.”
Jaramillo cited Albuquerque’s “engineering-savvy” workforce, low property tax rates, which are some of the lowest in the country, and tax deductions that target the aviation and aerospace industries. In addition, the city boasts “large swaths of vacant land, unrestricted air space and low population density.”
James Reid Gorman, Vice President of Administration for Theia, said Albuquerque was appealing to the company because of its “pipeline of engineering talent” from the University of New Mexico Engineering College. One goal is for the company to partner with all New Mexico universities to attract graduates and he said “It’s going to be a big part of our strategy in recruiting.”
Links to news coverage sources are here:
https://www.koat.com/article/aerospace-center-one-step-closer-to-being-built-in-albuquerque/34662638
https://www.abqjournal.com/1517515/aerospace-firm-targets-abq-for-new-campus.html
INTELLIGENT MANUFACTURING
There is a major effort to bring high paying technology-based jobs to communities all across the state. New Mexico is making real progress in the area. A recent analysis by the Milken Institute found New Mexico alongside New Jersey saw the largest gains in science and technology workforce over the past 2 years.
On May 3, 2021, Intel Corporation announced it will be investing $3.5 billion to equip its New Mexico operations for the manufacturing of advanced semiconductor packaging technologies, including Foveros, Intel’s breakthrough 3D packaging technology. The multiyear investment is expected to create at least 700 high-tech jobs and 1,000 construction jobs and support an additional 3,500 jobs in the state. Planning activities began immediately, with construction expected to start in late 2021.
https://www.intel.com/content/www/us/en/newsroom/news/new-mexico-manufacturing.html#gs.0yh3ny
BIO-SCIENCES
In the biosciences sector, more than a hundred new high-paying jobs are expected in Rio Rancho. The company Nature’s Toolbox specializes in bio-manufacturing to speed up the development of vaccines and pharmaceuticals. The average salary is $74,000.
GLOBAL TRADE
State officials are tapping into the international border with Mexico as a major economic opportunity. In recent months, the state announced major partnerships with at least three Taiwanese companies to set up shop in Santa Teresa, New Mexico. That includes Xxentria, which is a leading manufacturer of metal composites. Secretary Keyes had this to say:
“A lot of their heavy industry and manufacturing is going to be in Chihuahua and then we do the assembly in New Mexico, and also the headquarters. … And we’ve just hired a consultant for New Mexico that will be based in Taipei to help us with courting those Taiwanese companies and those Asian companies that potentially want to be on the border here.”
RECREATIONAL CANNIBUS INDUSTRY
On March 31, in a special session of the New Mexico legislature, the state became the 18 state to legalize recreational cannabis . New Mexico already has a medical cannabis program that has more than 107,000 enrolled patients. The new law takes effect July 1 and sales are to begin no later than April 1, 2022. However, if new regulations are in fact adopted before then, sales can commence moths before the April 1 deadline.
On Tuesday, May 26, it was reported that the first proposed rules dealing primarily with marijuana producer license and plant fees were released. The link to the regulations is here:
The first proposed rules deal with marijuana producer license and plant fees. The drafted rules if adopted will set the cost of both producer and retailer licenses at $2,500 annually. Licenses for cannabis consumption areas, or designated places where adults can smoke, eat or drink cannabis products, would cost $2,500 annually under the draft rule.
The proposed rules call for a 3-tier system for cannabis producer plant limits with a maximum of 4,500 mature plants. Larger-scale producers would be charged higher per-plant fees than smaller producers.
Plant count limits have been the source of controversy with the States “medical marijuana” program with the current limit for licensed medical producers set at 1,750 plants. The 1,750 limit somewhat arbitrary as an attempt to avoid flooding the market with product.
The regulations must be adopted in order to meet the specific deadlines for implementing the law. Those deadlines are as follows:
No later than Sept. 1, 2021 – Start accepting and processing license applications from producers.
No later than Jan. 1, 2022 – Start issuing licenses and server permits; begin training and education programs.
No later than April 1, 2022 – Begin retail sales of recreational cannabis.
Advocates of recreational legalization argue it will generate at least 13,000 jobs and millions of dollars for the economy. According to some reports, legalizing recreational marijuana will generate up to $800 million a year, a $200 million increase from the last years estimate of $600 million.
A BUDDING AGRICULTURAL INDUSTRY TO RIVAL ALFALFA
It was in 2017 that the New Mexico Legislature but Republican Govvernor “She Who Shall Not Be Named” vetoed the bill. The veto was overturned on procedural grounds in spring 2018. In 2019 New Mexico authorities finalized hemp rules in time for farmers to produce the state’s first legal harvest in 2019. The Corona Virus pandemic then hit New Mexico with a vengeance and the industry was placed on hold.
https://www.nmda.nmsu.edu/hemp-program/
https://hempindustrydaily.com/new-mexico-hemp-rules/
As the state and nation show signs of rebounding from the CORONA virus-induced economic slump, the hemp industry in New Mexico is poised to make a major strides in growth and development.
Hemp belongs to the same plant species as marijuana but is legally defined as having less than 0.3 percent THC. That’s a trace amount compared to cannabis, whose THC content can be more than 15 percent. The prime active ingredient in hemp is cannabidiol, or CBD, which comes from the plant’s leaves and flowers and is thought to have medicinal properties.
CBD is increasingly used in health and beauty products. Other parts of the plant have various uses. Hemp seeds, which contain no CBD, can be eaten raw or ground up for protein powder and dairy substitutes. Oil extracted from these seeds is used in skin care products. Fiber separated from the stalks can be used for clothing, bags, rope, beauty products, building materials, paper and bioplastics. The woody inner stalks, known as hurds, can be formed into building materials, mulch and animal bedding.
Agriculture is deeply rooted in New Mexico and in the top 10 of its industries. New Mexico is home to 23,800 farms and 43.9 million acres of farmland. The states top commodities include beef cattle and calves, pecans, hay, sheep, onions, chiles, greenhouses and nursery products, cotton, and corn. New Mexico is a major alfalfa hay producer, with 190,000 acres of the crop harvested in 2017. A legume hay, alfalfa is an excellent source of good-quality protein, fiber, vitamins and minerals. Hay generated $109 million in cash receipts.
https://www.farmflavor.com/new-mexico/new-mexicos-top-agriculture-commodities/
Hemp as an agricultural cash crop has the potential to immediately rival alfalfa as a cash crop in New Mexico. Hemp is a good crop for a desert state like New Mexico because it consumes up to 75 % less water than alfalfa and corn. … Statewide, 31 growers have licenses for indoor operations, totaling 9.74 million square feet, and four growers have licenses for outdoor cultivation, totaling 37.7 acres, according to the state Department of Agriculture.
Jill Browning, chairwoman of the New Mexico Hemp Association, has said the hemp industry will flourish on its own when the fiber is used more in clothing, construction materials and to replace plastics.
NEW MEXICO FILM INDUSTRY EMERGES AS NATIONAL LEADER
For well over a decade, New Mexico’s film incentive package, often controversial with Republican New Mexico Legislators and previous Republican Governor “She Who Shall Not Be Named”, has been seen as the very best film production credits in the industry. The film incentive package offers a 25-30% rebate on New Mexico goods and services.
“DIRECT SPEND” ANNOUNCED
It was on June 24, the Lujan Grisham Administration announced that the New Mexico film industry has brought in $623 million in what is known as a “direct spend” with one week left to go in the fiscal year. The film industry broke the record of $525.5 million set in fiscal year 2019. In fiscal year 2020, the film industry had a direct spend of $386.8 million despite the closure of the state during the pandemic. NBCUniversal has been able to kept production going during the pandemic.
According to the New Mexico Film Office, there have been 28 productions announced by the film office during the 2020-2021 fiscal year. The number of New Mexico crew hired for the 28 productions is 3,302 with 986 New Mexico actors within those productions. The biggest impact is with background actors, which is 7,963 New Mexicans hired.
Contributing to the record-breaking year, there are film production public-private partnerships with NBCUniversal and Netflix. Both have signed a 10-year commitment to bring film and TV projects to the state.
In addition to making the announcement on the $623 direct spend, Governor Michelle Lujan Grisham participated in the official opening for NBCUniversal’s production facility in Martinez town. Lujan Grisham gave the film industry major credit for its continued growth and had this to say:
“Quite frankly, this industry is a star industry during the pandemic. … [The film industry] had one of the lowest positivity rates, if not the lowest in the state. … We lead. We do it right. … This is an incredible place for the film industry. … We’re not just making movies here. We are a movie industry hub for the United States and the globe. This is where you want to be if you’re going to be doing productions.”
Alicia J. Keyes, the Cabinet Secretary of Economic Development Department added:
“This has put us on a global scale to attract film and television and multimedia productions to the state. … This money supports New Mexicans and small businesses around the state.”
The link to quoted news source material is here:
https://www.abqjournal.com/2403189/nm-film-industry-breaks-record-with-623m-in-direct-spend.html
ALBUQUERQUE ECONOMIC DEVELOPMENT FIVE-YEAR STRATEGIC PLAN
Albuquerque Economic Development (AED) is a private, nonprofit organization whose mission is to recruit new employers and industry and help local companies grow to generate quality job opportunities for the Albuquerque metro area. AED provides a full complement of services, all at no cost or obligation to businesses seeking to locate in the city. Some of the services they offer include:
Site selection assistance
Business incentive analysis
Real estate search
Customized site and building tours
Labor market analysis
Workforce recruitment and job-training assistance
Coordination of state and local assistance
https://www.abq.org/about-aed/
AED ANNOUNCES STRATIC PLAN
On Tuesday, June 29, AED announced what it touted as its “first-of-its-kind five-year strategic plan” to stimulate job creation, to work to overcome some of the city’s most chronic problems and to boost the city’s brand nationally. The AED’s vision under the strategic is idealistic as idealistic as it gets and yet straight forward:
“That the greater Albuquerque area be known and recognized for having the highest quality of life and the most diverse, sustainable economy in the region.”
AED’s strategic plan looked at where Albuquerque ranks as compared to 10 other metro areas that compete for some of the same economic development opportunities. The 10 city’s are Dallas; Phoenix; Salt Lake City; Boise, Idaho; Colorado Springs; Des Moines, Iowa; El Paso; Omaha, Nebraska; Tucson, Arizona; and Tulsa, Oklahoma.
AED’s specific five-year goal is for Albuquerque to rank in the top 25% of midsized markets in the U.S. for job growth. That in and of itself will be a steep climb for the city which saw a pathetic 0.7% job growth in the past five years which placed the city in the bottom 25% for cities with a population of between 500,000 and 1 million people.
AED’s strategic plan will capitalize on the area’s major strengths:
A high number of people with professional and doctorate degrees,
The synergy of multiple national labs
A more affordable workforce
Higher education institutes that want to be responsive to workforce needs and
A sunny, mostly natural disaster-free, climate.
AED’s plan identifies six major industries that have momentum now that will help with economic development:
Aerospace
Biosciences
Renewable energy
Digital media and film
Corporate and professional services
Manufacturing
Because of its limited resources, AED will begin by choosing two of those industries to focus on. AED President and CEO Danielle Casey acknowledged the difficulty of implementation of the plan and said:
“[It] is a highly aspirational vision. But if we don’t have one, we have no idea where we want to be someday … I’ll be frank. I don’t see this vision happening in the next five years. But that was also why this five-year strategy is really the start of moving forward for the next 20 [years].”
THE CHALLENGES TO OVERCOME
AED identified the major obstacles to economic development all too well known to anyone who has lived, worked and done business for any length of time in Albuquerque:
Crime, poverty, homelessness, ineffective education and workforce preparation, and a lack of national and major publicly traded companies all made the list.
AED’s study asserts that violent and property crime in Albuquerque’s metro area is lower than the national average but higher than the other 10 cities looked at for comparison, except Tulsa. AED’s assertion that Albuquerque’s metro area is lower than the national average is embarrassingly false. According to FBI crime statistics, Albuquerque crime stats are exceptionally higher than the national averages in violent and property crime rates. “Neighborhood Scout” provides comprehensive database of real estate data and compiles a listing of what it considers are the 100 most dangerous cities in the United States based on violent crime rates and population. Over the last 5 years, Albuquerque has made the top 100 most dangerous cities in 2021, with the city going from the low rank of #74 to a current rank of #21.
COST OF LVING, WORKFORCE AND EDUCATION
According to AED’s strategic plan, the metro area has a large, competitively priced workforce which is essential for any new business that wants to hire local and not relocate employees. According to data compiled, Albuquerque’s wage growth is lower than all 10 of the competitive markets compared to in the study.
As to an educated workforce, Albuquerque has a high-level number professional degree. Upwards of 2.2% of Albuquerque’s 25-and-older population holds a doctorate degree which more than any of AED’s 10 competitor markets.
Albuquerque’s high school diploma and bachelor’s degree statistics are disappointing. According to AED’s report, about 11.2% of Albuquerque’s 25-and-up population holds less than a high school diploma. About 17.3% hold a bachelor’s degree, near the bottom of the 10 cities Albuquerque was compared to.
AED executives reported that Albuquerque is able to recruit highly educated workers but it has the problem not being able to produce an educated workforce. Notwithstanding , AED leaders say Central New Mexico Community College and the University of New Mexico are committed to responding to workforce needs.
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS IDENTIFIED
AED’s strategic plan provides a “bullet points” of the city’s strengths, weaknesses, opportunities and threats to the city’s economic development:
STRENGTHS
• Outstanding quality of life & climate
• Cultural and ethnic diversity
• Central U.S. location
• Transportation infrastructure
• Economy: Federal and military labs and the intellectual capital and innovation they bring
• Human capital/workforce: high concentration of Ph.D.’s and STEMrelated professionals
• Lowest cost renewable energy
• Higher education institutions – Central New Mexico College, New Mexico Tech and University of New Mexico
• Absence of natural disasters
• Welcoming to newcomers
WEAKNESSES
• Quality of life: crime, poverty and homelessness
• “scarcity” mentality and failure to “think big”
• Hostile business climate on the part of individual cities and the state government
• Relative isolation from major U.S. markets • Ineffective education, training and preparing the local workforce
• Absence of a major international airport and direct, nonstop routes
• Absence of collaboration between and among postsecondary institutions
• Deteriorated Downtown ABQ
• Few national and major publicly traded companies
OPPORTUNITIES
• Improving K-12 education
• Growing and diversifying the region’s economy to be less dependent on oil/ gas and government
• Increasing the focus on existing business
• Attracting firms and enterprises in key economic sectors
• Improving the human capital/ workforce assets of the region
• Elevating the identity and brand awareness of the Albuquerque region • Improving competitiveness and business climate
• Creating a more cohesive, effective and efficient economic development ecosystem
THREATS
• Continued negative business climate
• Failure to become less dependent on the oil/gas industry and federal government (labs and military)
• Failure to adopt a systemic, focused and performance-based approach to economic development
• Failure to “level the playing field” visà-vis competition from other states, especially taxation of business and lack of incentives
• Failure to address crime, poverty and homelessness
• Failure to improve the traditional public K-12
LINKS TO QUOTED SOURCE MATERIAL ARE HERE:
https://www.abq.org/2021strategy/
https://www.abq.org/wp-content/uploads/2021/07/AED103_2021StrategicPlan_TwoPager_Final_Web.pdf
https://www.abq.org/wp-content/uploads/2021/06/AED103_2021StrategicPlan_v3_PRINT-READY.pdf
https://www.abqjournal.com/2404655/abq-economic-developers-set-lofty-jobs-goal.html
COMMENTARY AND ANALYSIS
Election after election, we hear New Mexico politicians running for office at all levels and elected officials from both parties repeatedly point out that we routinely rank high on the bad lists of crime, hunger, poverty, and low on the good lists of income, child well-being, places to retire, quality of education and jobs.
When you review the 10 major private sector industries identified by the state and the 6 major private sector industries that AED has identified to diversify the city’s and the state’s economy, it is clear that the lists are essentially identical once you consider the overlap and commonality. Concentration on the identified sectors or industries that have the best shot at diversifying New Mexico’s economy is essential.
There is an absolute need to concentrate on the identified industries by the state and AED, otherwise, within 20 years, if not sooner, virtually all of New Mexico will be nothing more than a dusty high desert state with more empty space, more ghost towns, beautiful vistas and sunshine and with no one wanting to live here but only visit. The only industries that will be expanding will be “assisted living” homes and funeral homes and cemeteries with New Mexico becoming the grave yard of lost opportunities, hopes and dreams for a better life and livilhood.
Links to related blog articles are here:
https://www.abqjournal.com/2404655/abq-economic-developers-set-lofty-jobs-goal.html