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Newsbites – July 2016
New Mexico’s Unemployment Rate
Despite a high-level strategy for economic development, New Mexico’s economy has been stagnant. The unemployment rate is the fourth highest in the United States.
New Mexico’s Department of Workforce Solutions reported that the seasonally adjusted unemployment rate remained at 6.2 percent in May, unchanged since March, but lower than the 6.6 percent rate of a year earlier. The national rate in May dropped to 4.7 percent. The decline in oil and gas prices and their effect on related industries including trade, transportation and utilities have taken a toll. The energy sector, which includes mining and logging as well as drilling, lost 6,500 jobs over the last 12 months. The Associated Builders and Contractors, in March, reported the overall construction unemployment rate at 14.2 percent, ranking the Land of Enchantment at 47th—near the bottom.
The state’s economy added 2,900 jobs between May 2015 and May 2016, most in the private sector. Industries with the largest job gains included information and trade, transportation and utilities, as well as business and professional services and education and health services, which added 6,900 jobs over the past year.
While Arizona, Colorado and Utah are among the top states nationally for employment growth, New Mexico is among 10 states that have failed to regain all jobs lost in the Great Recession, even after more than seven years of recovery. Wages in New Mexico, however, have been on a slow upward trend, according to the Bureau of Labor Statistics.
New Mexico’s Economy Ranked Fifth Worst
According to a report released June 6 on the financial website WalletHub, New Mexico ranks as the nation’s fifth-worst economic performer, ahead of Maine and behind Louisiana. In “economic health,” which included metrics such as unemployment rate, median household income, percentage of residents living below the poverty level and other measures, New Mexico ranked dead last among the 50 states. Moody’s Investors Services predicted that New Mexico is on a downward spiral into another recession.
Still, a few positive indicators can be found. Like most of the rest of the United States that has extra money to spend as a result of lower gas prices, the state’s hospitality and leisure sectors grew 4.21 percent during the past 12 months. The economic impact of New Mexico’s tourism industry in 2014 was the largest in state history. The industry injected $6.1 billion into New Mexico’s economy and supported about 89,000 jobs in 2014. The one positive indicator for New Mexico reported by WalletHub was “innovation potential,” where the state ranked 15th. That category measured commercial areas such as the percentage of jobs in high-tech industries, patents, research and development (R&D) spending and entrepreneurial activity.
Report: “New Mexico Susceptible to Corruption and Crony Capitalism”
According to a report released in January, New Mexico’s reliance on government jobs, its history of corruption and a “poorly compensated” citizen Legislature create a “perfect storm” that has been a major reason for the state’s languishing economy. “New Mexico’s economy is stagnant, largely because of the state’s reputation for corruption and crony capitalism,” the report states. The report defines crony capitalism as “regulatory favoritism, pay-to-play political coercion and interest group politics, in which companies gain more from political activity than their own economic activity.”
The report is from the nonpartisan Committee for Economic Development and the University of New Mexico. The CED is a Washington, D.C.-based nonprofit, business-led, public-policy organization.
The report recommends that business leaders push for greater campaign-finance disclosure, an independent ethics commission—something that has repeatedly not passed in the Legislature—and a “rigorous” review of tax subsidies to determine whether tax incentives for certain corporations are effective. Private companies can apply for 34 different tax credits in seven industries. Between 2011 and 2013, the state issued 860 subsidies at a cost of more than $262 million. Many of the industries that benefited also contributed to the campaigns of public officials who help write the subsidies, according to the report.
New Mexico is one of 16 states that still have a part-time legislature with relatively low pay and limited resources. The report says this makes lawmakers “susceptible to interest-group politics and lobbyists for basic information on the issues.”
Residents Want Businesses to Help Improve the Economy
It can be argued that it is the job of the private sector and entrepreneurs—not just the government—to grow the private-sector economy.
According to a 2016 Garrity Perception Survey conducted by Research & Polling, a diverse representation of New Mexico residents—76 percent—say they think that business owners and executives should be more involved in helping to improve the state’s economy. Seventy-one percent want business owners and executives to be more active in helping solve New Mexico’s social problems. Business leaders have to adapt to the market and decide whether and when to take risks. But 55 percent feel that business owners and executives don’t care how their decisions affect the community.
In addition to providing meaningful financial support to local and small businesses that have room to grow, Tom Garrity, president of the Garrity Group Public Relations, suggests that business leaders become engaged in the community by mentoring young people toward career pathways, improving an aging community facility, providing expertise by volunteering as a board member for a nonprofit and supporting community initiatives.
For more information on the survey, go to www.garrityperceptionsurvey.com
Albuquerque’s Business Environment
WalletHub has ranked Albuquerque in the bottom 10 among 150 “best places to start a business” cities. The report measured 16 factors in three broad categories: business environment, including number of startups per 100,000 residents and five-year survival rate; access to resources such as venture capital and college-educated workforce; and costs such as cost of living and corporate taxes. MarketWatch ranks Albuquerque 92nd out of 100 cities studied for “business friendliness.”
In recent months, Albuquerque fell from 155th place to 179th out of 200 large cities in Milken Institute’s annual index of the best-performing urban economies. Although construction and manufacturing employment numbers are down, Albuquerque’s job market is growing modestly. At the end of February 2016, private-sector employment grew by 1,400 jobs, or 0.5 percent, over the year before. Most of that growth was in the healthcare and education sectors.
Vacant, arable land in the metro area is ripe for growers looking to get in on the agriculture boom, especially with large organizations such as Presbyterian Healthcare Services attempting to procure more locally grown produce. Ann Simon, economic program-development manager for the Mid-Region Council of Governments, which launched the online resource, New Mexico LandLink, said, “Think of the production value we could see from these lands. Right now, there’s mostly alfalfa, but what if it was vegetables?”
There are at least six business accelerators now operating in the Albuquerque metro area, working with local entrepreneurs seeking to accelerate the development of new and existing businesses. Innovate ABQ is a joint UNM, City of Albuquerque, Bernalillo County and private-partner effort to build a seven-acre R&D district near downtown. The project aims to become a center of entrepreneurship.
After four years of negative ratings for Albuquerque’s prospects for commercial real estate investment and development, the Urban Land Institute gave the city a green dot in its most recent Emerging Trends in Real Estate report. That translates to “generally good overall real-estate prospects.” Home sales are also improving.
Biochar Conserves Water and Increases Agricultural Yields
Biochar, partially combusted wood or woody biomass such as pecan or peanut shells, can greatly increase agricultural yields. Because the pores of the material are opened during the charring process, when incorporated into soil those tiny spaces hold water, nutrients and beneficial microorganisms that increase the soil’s fertility.
According to Gordon West, it is not a replacement for compost and actually needs to be “charged with compost or compost tea, which adds nutrients to get microbial life thriving underground.” West says that biochar only needs to be added to the soil once and that its effects can last at least a thousand years. University trials have shown increased crop yields by as much as 800 percent. West says it increases water retention by a factor of four.
Biochar is actually an ancient concept used by native people in many locations, particularly in tropical rain forests prior to the European invasion. Scientists studying those societies only recently rediscovered the practice. It is similar to activated charcoal, so it can also be used for air or water filters or to neutralize acid mine tailings and absorb toxic heavy metals from mining operations.
West says that because it can be made with the lowest-quality wood, biochar has the capacity to provide profits and jobs. West’s company, Gila WoodNet, in Santa Clara, near Silver City, New Mexico, is one of several operations in the state that produce and sell biochar. Gabe Jiménez’s Gila Wood Products is another. Bill Knaus of Columbus, New Mexico, working with the nonprofit group Border Partners, assists people in improving their quality of life, including growing some of their own food. Knaus manufactures biomass-burning stoves that heat homes. The three companies are working together.
To produce biochar, West fills a “pyrolizer,” a 500-gallon tank updraft burner that holds 70 cubic feet and burns down about one foot per hour, reducing the material to about half its original volume. “The burner heats the wood just enough to drive the gases out and leave the carbon behind,” West said. He is investigating ways to capture the gases, which could be used for various purposes.
West says, “A pound of woody biomass can produce a half-pound of biochar and 60,000 BTUs of thermal energy. If the energy released during pyrolysis is utilized—displacing an equivalent amount of fossil fuel—and the biochar goes into the soil, for every pound of biomass used, 3.8 pounds of carbon dioxide will be removed from the atmosphere.” West says that biochar “is the only geo-engineering opportunity that could be of sufficient scale to reverse global warming.”
For more information, call West at 575.537.3689.
Bilingualism: One of New Mexico’s Competitive Advantages
New Mexico is the state with the highest percentage of Hispanos and Native American tribes. Many intact multigenerational families speak English in addition to Spanish or other indigenous languages, making bilingualism a way of life. New Mexico’s bilingual culture is protected under the state’s Constitution.
The state’s history of bilingualism uniquely positions New Mexico to lead the country in dual-language early-childhood education. “Our multilingualism is a valuable asset, which we risk losing unless we invest boldly in building a bilingual teaching force and a dual-language early-childhood education system,” says Adrian Pedroza, a member of the president’s Advisory Commission on Educational Excellence for Hispanics. “New economies recognize that speaking, reading and writing in more than one language makes us more competitive and opens global career opportunities. New Mexico should leverage one of our people’s greatest assets, our bilingualism, to become the national leader in dual-language early-childhood education.”
Innovate New Mexico
Innovate New Mexico is a new umbrella group set up to coordinate technology commercialization efforts collectively statewide. In April, the group started bringing together research universities and national laboratories to showcase innovations from around the state in a single forum. About 200 investors, entrepreneurs and technology-transfer professionals attended the first event, where they heard panel discussions and pitches from researchers from the University of New Mexico, New Mexico State University, New Mexico Institute for Mining and Technology, as well as from scientists at Sandia National Laboratories, Los Alamos National Laboratory and the Air Force Research Laboratory.
Technologies ranged from new medical devices and processes to inventions in water treatment, consumer electronics and optics and photonics. Researchers from UNM discussed a new method for killing disease-carrying mosquito larvae with essential plant oils. New Mexico Tech showcased a novel water-desalination process that could mean lower costs for the oil and gas industry to clean “produced” water. Sandia Labs showcased a noninvasive detection device that could potentially identify pathogens in a person’s breath rather than through blood or urine. More than a dozen startups showed off products and services in trade booths.
New Mexico’s Film Industry
The film industry pumped nearly $290 million into New Mexico’s economy in 2015. The state attracted 77 productions, 25 of which had budgets of more than $1 million.
In 2015, MovieMaker Magazine, for the first time, ranked Albuquerque and Santa Fe among the top-10 best cities and towns to be a filmmaker. The magazine’s 2016 list ranks Albuquerque fifth among big cities and Santa Fe fourth among small cities and towns.
The magazine credits the state’s film-incentive program, which offers a 25 percent to 30 percent refundable tax credit, and the state’s Film Crew Advancement Program, which helps with on-the-job training.
The film industry offers opportunities for trained, dependable New Mexico entrepreneurs to prosper if they’re willing to accommodate the industry’s nontraditional needs and long hours.
Venture Acceleration Fund Awards
Five firms have been named winners of this year’s Venture Acceleration Fund awards. Administered by the Regional Development Corp, the fund is primarily from Los Alamos National Security LLC. The awards are promoted as a collaborative investment with a goal of adding jobs and revenue to northern New Mexico.
The 2016 awardees represent a diverse array of industries based in five of the seven counties that were invited to apply: Los Alamos, Santa Fe, Sandoval, Río Arriba, Taos, San Miguel and Mora. The companies selected are as follows:
EcoPesticides, a Santa Fe–based manufacturer of biologically based, environmentally friendly pest controls; Mora Valley Woodworking, of Mora, a manufacturer of environmentally friendly cremation urns that utilize northern New Mexico materials; Southwest PPE Services of Española, a commercial cleaning service transitioning to Personal Protective Ensembles for firefighters and first responders; Taos Mesa Brewing, of Taos, a microbrewery collaborating with area farmers to develop local barley for brewing and establishing a regional craft malting facility; Tibbar Plasma Technologies, of Los Alamos, developer of a prototype device to support new technology for high-voltage, direct-current transmission.
Canadian Firm Invests in New Mexico Wind Farm
Fengate Capital Management, a Canadian firm that manages nearly $2 billion in assets, announced that it is acquiring a 25 percent equity interest in the San Juan Mesa Wind Project, located in Roosevelt County in southeast New Mexico. A large part of Fengate’s business is public-private markets. The company is also developing deals for gas-fired generation, solar, and other wind projects in the region.
San Juan Mesa, which already has 120 MW of capacity, sells the energy it produces to Southwestern Public Service Company, a subsidiary of Xcel Energy.
Gila River Diversion Plans Scaled Down
Last month, the New Mexico Central Arizona Project Entity (NMCAPE), the agency in charge of building a controversial diversion on the Gila River, directed its engineering contractor to continue evaluating only those elements of the project that would cost $80 million to $100 million, the amount the federal government is obligated to provide. An earlier, larger-scale plan had been estimated at $1 billion. An estimated $10 million to $15 million has already been spent or committed to engineering contractors, attorneys, salaries and studies.
Many unanswered questions remain regarding the location and scale of the diversion, where the water would be stored and its potential environmental impacts. It is also unclear where funding for the diversion’s pumping operation and management would come from and how much the state has available to put into the project.
NMCAPE works in conjunction with the New Mexico Interstate Stream Commission, the members of which are appointed by the governor. The commission voted to pursue the diversion in 2015.
Leading California IT Company Expanding into New Mexico
Gov. Susana Martínez has announced that PCM, a leading California Internet technology (IT) company, will expand its operations into Río Rancho, New Mexico, creating 224 high-paying sales positions. The governor credited the company’s decision to her administration’s tax cuts for businesses and her trip to California earlier this year with business executives, touting New Mexico’s business environment.
PCM provides technology solutions and support to clients throughout North America, including the National Football League’s Cincinnati Bengals and Green Bay Packers, Sea World, Wendy’s, General Electric and many other international organizations.
New Mexico will invest $700,000 in Local Economic Development Act (LEDA) funding for infrastructure improvements to accommodate PCM’s expansion.
According to a press release, in recent months the governor announced more than 1,000 jobs throughout the state in high-tech and traditional manufacturing, healthcare, IT and finance.
Mobile Farmers’ Market Begins Second Season
The Healthy Here Mobile Farmers’ Market has begun delivery of organic, locally grown fruits and vegetables to six locations in Albuquerque, increasing access to healthy foods for Hispanic/Latino and Native American families. The farmers’ market on wheels will operate through Oct. 25. It will accept all forms of payment, including SNAP/EBT, Double Up Food Bucks and WIC.
The mobile market also offers nutrition education. Three nonprofits—Agri-Cultura Network, Kids Cook and Street Food Institute—will offer food tastings and share recipes. The market is funded through the Center for Disease Control and Prevention’s REACH (Racial and Ethnic Approaches to Community Health) cooperative agreement, as well as through Bernalillo County and other funders.
The mobile market will deliver to specified locations as follows:
Mondays, in the International District:
· 9:30 to 11 a.m., at the UNM Southeast Heights Clinic, 8200 Central SE
· Noon to 1:30 p.m., at First Nations Community Healthsource, 5608 Zuni SE
· 2:30 to 4 p.m., at Van Buren Middle School, 700 Louisiana SE
Tuesdays, the market will be in the South Valley:
· 9 to 10:30 a.m., at Presbyterian Medical Group, 3436 Isleta SW
· Noon to 1:30 p.m., at Los Padilla Community Center, 2117 Los Padillas SW
· 3 to 4:30 p.m., at First Choice Community Healthcare, 2001 El Centro Familiar SW
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