State of the State's Economy With Elizabeth Martinez

You New Mexico known as the Land of Enchantment, but it has never been described as the Land of Economic Prosperity. As the nation faces unprecedented economic challenges, how will New Mexico meet the demands of the

new global economy? What must be done today that will prepare us for tomorrow's competitive marketplace? Tonight we take a look at some possible answers to these questions. KNME Television presents The State of the State's Economy, a public affair special report hosted by Elizabeth Martinez. Good evening. The experts are telling us that the recession is almost over, but no one's talking about feeling it yet. Our leaders say New Mexico is a boom land for the future, and that's hard to believe in a state that ranks 47th in per capita income and where businesses seem to keep closing down. Our unemployment rate remains slightly higher than the national at 7.4%. This year several hundred manufacturing employees have lost their jobs in Albuquerque added to 100 statewide the previous year. Metal mining jobs decrease by 28% and oil and gas extractions by another 12.5% in the past year. The statistics are bleak, but there is a bit of hope. Last year we experienced a very slight growth in the

economy. According to our experts, experts tonight, the bad economic news has bottomed out. The worst is over. Tourism is holding up, defense conversion is working, and there's an exciting new potential for manufacturing jobs in New Mexico. Joining us tonight for a roundtable discussion on the positive future of our state's economy, our Bill Garcia, Secretary of State Economic Development, responsible for the state's technology development plan, and charged with promoting defense conversion by the 1993 legislative act. Long-time state democratic representative Raymond Sanchez and House Speaker and analyst Brian McDonnell, director for the past 12 years of UNM's Bureau of Business and Economic Research. Welcome. Thank you for joining us. New Mexico is the nation's most defense dependent region. In fact, one out of four of our jobs is government related. So what can we hope for from the New Mexico Defense Conversion and Technology Act signed into law by Governor King on April 5th?

Speaker Sanchez, would you like to tell us what this law can do for us? Well basically the Defense Conversion Act of 1993 is a reintroduction and reaffirmation. A principal set-out way back in 1972, which recognized at that time that eventually the Cold War would be over, and that New Mexico had to look at its defense institutions, the installations, our laboratories and our universities, and try to bring them together for the purpose of working with local businesses to convert the technology that they have developed for defense purposes and turn them into tools for economic development. The Act in 1993 was introduced pursuant to legislation introduced by Senator Bingham in the United States Congress and Senate, and we are dovetailing our act with the legislation he proposed and has had passed. We have given authority to the Department of

Economic Development to coordinate activities in bringing together proposals that will then be evaluated so that we can get federal dollars for the purpose of converting ideas that were generated and the genesis was behind offense and move them into the community for economic development, privatization, contracts, and it's an idea that's been on the minds of many of us for many years. We're just glad that the Cold War is over and now if we can take those piece-step dividends, we want to turn them into economic activity for New Mexico. Defense conversion technology transfer, that's the lingo nowadays. What does that mean for New Mexico companies? What is this conversion? What's happening? Would you like to address that Bill Garcia? Sure. I think what it means is that we're going to establish a process whereby companies will have access to the

technology that exists in our federal laboratories. If you think about the critical assets that New Mexico has, I think we have two that we need to build on. One is geography and all that that implies with respect to trade with Mexico, but that's another story. But let me talk about the Defense conversion because the other strategic asset we have is our technology, the technology that resides in the two national laboratories, San Diego and Los Alamos. We also have a third national laboratory associated with the Air Force, the Phillips Laboratory, and we have a number of federal installations like the White Sands Missile Range and the NASA test facility that's associated down there. So technologically, New Mexico has a very strong strategic asset and the idea as the speaker has mentioned is to take the technology that here to four has been used in the Cold War application and convert it now to use by our private sector so as to create jobs and to help make United States, in our

case here in New Mexico, make our companies more competitive on the global competition. How about a specific example? For example, the other day you were telling me about Red Sky Plating. That's an excellent example. Red Sky Plating is a small electroplating company here in Albuquerque, employs 15 people. We visited Red Sky Plating as part of response to a proposal that we had submitted and they were one of the examples of the kind of small businesses that exist in New Mexico that we'd like to see convert their technology into commercial application. They were doing electroplating of various and sundry structures for the defense industry and I don't know exactly what all of these widgets were but they were electroplating and they would do a number of different volumes. Over the last year and a half their sales were dropping and

they were very very concerned about it. As a result of an outreach that was made by the Manufacturing Productivity Center and ultimately tied them up with a small business development center is all of which are part of what we're hoping would be a comprehensive approach to the issue. They developed a business plan and they identified a niche market and as it turned out their primary customers now they have customers in Dallas and in Massachusetts and they're able to provide electroplating on such things as these high value fashion buttons that are used in the clothing industry. We asked them how they were able to sell to Dallas which is a fashion capital and a lot of infrastructure and suppliers around the Dallas area and they said that because the defense department had such high standards with respect to the solvents and the and the electroplating processes that they had built into their process they were able to deliver a quality product with evenly distributed gold platings and and so

they were able because of their qualities to secure the small piece of that market. Their sales now are up trending upward in that whole arena costume jewelry and in fashion design and so they have found a commercial application that is converting their sales base from what was previously defense. They never did have to lay off employees or we do stuff. They have a fact that we hope in the future that we'll even be able to add down employees. Great example. Now we've been losing manufacturing jobs for the past three years. In fact recently you name it, Towsomolecorp Mine, Roswell's TMC, the Martin Marietta Postal Machine Plant, the Siemens telecommunications, GE aircraft. We're going to add jobs with Intel and Motorola but the balance doesn't seem to be there. We're losing more jobs and we're gaining. There's this new manufacturing extension program. Bill Garcia may want to address first and

speaker Sanchez. What is that going to do for us? That's a five-year plan but how is it going to get jobs soon? Well as the speaker mentioned the legislature charged the department with responsibility to go out and utilize whatever resources necessary that they provided and pull together an approach that would allow us to do three things. One, have a centralized oversight process to bring the state together. Make sure it was inclusive and statewide. Secondly that we form strategic alliances along the way and third that we developed a specific small business program. So as we looked around at opportunities and as we looked at what the future had at least try to figure out what the future will hold we settle on manufacturing as an area that needed support and that comes from some research that has been done by the governor's technical excellence committee which was chaired by Dr. Hecker and Dr. Nareth was on and the governor's science advisor. The best technical minds that we could get. The second research that was done was from Jedi, the

joint economic development initiative in which the governor and senators the minigame were both on and they specifically looked at manufacturing. So we looked at manufacturing as an opportunity and about that time came an opportunity to submit a proposal to the federal government to secure from the pool of funds of over 500 million that would help us enhance that process. So we applied for that and we're waiting here. All right and we are have a good chance as a finalist or we were selected to for a site visit which tells us that we are in the finals so we're very optimistic about that opportunity. All right thank you we'll keep our fingers crossed for that. Maybe that ties into Brian McDonald's prediction in a recent Albuquerque journal article you predicted a good year for Albuquerque this year and and even better one next year on the economic barometer what does a 2% growth in New Mexico means. Well for New Mexico 2% growth means about 12 to 13,000 new jobs each year for Albuquerque it's about 6 to 7,000 jobs and I think the growth

that we're seeing in New Mexico you have to put in context of the national economy where we're seeing very sluggish employment growth and so New Mexico's doing doing better than U.S. economy and and I guess I wouldn't picture quite oblique picture as you presented of our economy I think we're doing fairly well. You in your statistical analysis do you see those jobs spread into several areas like small companies like they've been mentioning of maybe under 50 employees or is it mainly in our health and business service sector? Well we don't get a lot of current data on where those jobs are but they're primarily in the retail trade sector in health services as you mentioned in business services and also in state and local government. The other sector that's doing well is construction our construction industries were in a terrible depression and they've recovered they recovered last year and we're seeing

employment growth there about 7% in the construction area. I heard a comment recently about specialized construction workers being difficult to find in New Mexico I wonder if any of you can respond to this for example the Intel plants new construction will require about 500 people but certain trades such as pipe fitters and other things I've heard that they've had to import the jobs or are going to from Colorado can any of you address that? I think that that's probably accurate to an extent the type of facility that Intel is building requires some very specialized training but the apprentice programs that we have in place in New Mexico will eventually be able to catch up with those needs that Intel has but they're looking at now is they're going to the special trades they're going to the carpenters they're going to the pipe fairs are going to the sheet metal workers and they're telling them bring us people if you can't fill them with New Mexicans go to your trade outside of

New Mexico and try to bring back to New Mexico those who have left to find jobs because as Brian told you earlier the construction industry took a dramatic decline and had been sitting at the bottom for quite a while that's due in my opinion of course to 12 years of some real regressive administration at the national level those people are now being asked to come back home and so many of those people you're talking about that are being asked are New Mexicans who are returning number one is what we're asking Intel is willing to work with us to the degree they can that is a commitment they made to me personally when I introduced the legislation to give them their double-weighted sales tax that is something that I plan on holding their feet to the fire on because New Mexico and New Mexicans are trainable I guess you're well aware that we are probably the most productive workforce in the United States we are easily some of the most intelligent people in the United States I believe and our workforce can learn

quickly and can fill those jobs without a problem I guess I would also like to take exception to something you said a minute ago you know we keep on referring to New Mexico is ranking 47th in per capita income I think when you look at that figure in the way it should be looked at you'll find a totally different story and Brian I'd like you to comment on at some point if not today but eventually New Mexico has 30% of its population under the age of 18 17 and younger 11% of its population 65 and older and close to 19% of its population 75 and older that population spread which leaves you a very small percentage of people who are earning income in a state as small as ours with that many people who are earning zero because of their age primarily and the

seniors who are among the lowest wage earners and that's a statistic everybody will tell you but I think it's somewhere around 15 to 17,000 average that drives our per capita down not because people aren't working on being paid well so when we take those figures I think eventually the Department of Commerce is going to have to extrapolate the populations and asterisk that and say here is a reason for that you'll find that the three lower states also have very high populations of children and large populations of senior citizens and the West in particular is experiencing that today and New Mexico specifically has one of the highest populations of children. Brian would you like to respond to some of these statistics and also what we have prepared in the state for skills training where people can go to prepare for these new jobs? Well I can address

the statistics I think Speaker Sanchez is right there's a lot more to our per capita income reading than just a measure of economic well-being and I think another point is it's the cost of living cost of living in New Mexico is is lower than in many other states I mean I think our average salaries are 25,000 but it goes a lot farther here in New Mexico than say in New York City or San Francisco so those measures aren't really completely accurate. All right and for skills training how can people prepare for these jobs in the future the new kind of manufacturing jobs the jobs that have been converted over from defense preparation is there a way that industry government and industry are linking up to provide this training? Would you like to come and build? I'll tell you that the Mexico implant training program is a model for the rest of the state and it's based on the premise that we have very highly motivated workforce but not the most highly skilled workforce but very very

capable of being trained so it's a unique partnership. I think all the refer to the Speaker on this because he carried the bill that funded the implant training of the record level this year which was unanimously heralded by the business community is probably the single best business session that we've had in the Mexico. That is a very important component in training in plant training. The time it back what we're talking about earlier defense conversion our lab Sandy a labs for instance has at its disposal new methods of learning based on computerization the technology transfer to children to give them a leg up in that whole arena is something that can be adapted to people in the workplace those methodologies and the systemic changes that they've gone through in the military to teach people who come in how to deal with high-tech equipment that is proprietary to the military but

developed to a great extent right here in New Mexico at Sandia and Curtain. That is an area that they are willing to share with us today you start talking about taking that technology and helping our workforce quickly adapt to what you're talking about the changes in the specializations there is a perfect example how business government and educators assuming they're well paid and we put enough money into education in the state colleges and our public schools can eventually forge a partnership rather than sit around doing partisanship we've got to start talking about that it's extremely important that everybody recognize the tools we have available to make New Mexico a better place to live and it truly can work here but that's just one that's a tip of

the iceberg and we've got to get past this idea if it's my idea or nobody's idea we've got to get past this idea that we're going to focus in one area we've got to broaden our debate about what New Mexico wants to do not just with its children but its workforce perhaps bill you could answer this question for example if I'm someone who's been laid off from a plant recently can I prepare for these new openings in manufacturing in the future if I for example attend Albuquerque TVI or what example absolutely you can and what we're trying to do is provide the mechanisms to link these people up initially so that when they are laid off if that's the case that they're they have a counseling and they can identify opportunities in new career choices for them then we have the option of working with the industry in terms of the implant training if they're expanding their their employment as Intel is then there'll be there'll

be an appropriate position to make that type the New Mexico Department of Labor is the principal agent here in ensuring that we take them from where they are if they're having a dislocation and then moving them through to a new opportunity and this is on a statewide basis we have labor offices in every county and they have the knowledge and the information about how to make these linkages. Remarkably the state government has a surplus of I believe $88 million at this point and it's expected to be much more than a hundred million by the end of the next budget year. Now couldn't the legislators do something to help provide some impetus in the economy such as reducing taxes or maybe repealing that gas tax. I'm not sure that that gas tax has in any way impeded the economy. Our figures show today and I think Brian will be able to analyze at the end of the quarter what's happened but right now it shows that more gas was sold this summer than at any other time it shows more gasoline

that's right it didn't go down but everybody was saying it's not tourist are not going to come to New Mexico. Did you hear the Republicans? Letusio screaming the tourists were going to stop coming. Letusio is wrong not only that the price of gas is at the lowest it's ever not ever been but that it's been since the legislature convened last January. Economic impetus is created by setting an attitude and being able to broaden the discussion about what you're going to do. The economy is spurred by one of two things more jobs better pain jobs but the other thing that affects our economy in New Mexico especially where you have over 50% of the budget spent on education higher education technical vocation and public schools by the number of students we have we have 310 thousand children in our school we have 62,000 plus children or young men and

women at our universities that is what is driving the economy we need to provide adequate funds to be sure they're adequately educated but we need to do is we got to start thinking about the next generation rather than the next general election. How about if we go to Brian McDonald once more and maybe we could get into NAFTA for the last couple of minutes. What is your feeling about how NAFTA will affect New Mexico? Well I think NAFTA has a lot of potential for New Mexico particularly if we open the border crossing at Santa Teresa because it will result we're going to see a lot of expansion of trade with Mexico. However for New Mexico to really take advantage of NAFTA we have to find ways to add value to the products that are being traded. It's not enough to have an opening in our border we have to find ways to add value to those products and that means we need to develop continue developing our

manufacturing sector to develop specialized business services. Do you have anything to trade or to sell the Mexico at this point that would benefit us? Well I think that's one of the reasons trade is so low between New Mexico and Mexico today we have a small manufacturing sector in New Mexico we have a small agricultural sector and those are the things that principally trade in foreign commerce. Maybe our green chili. But if we want to take advantage of expanding trade with Mexico we've actually continued to develop our manufacturing capability in our high-tech business services because those are the things that add value to foreign trade. In terms of the current economy in Mexico I mentioned earlier with employment growth of about 2% our personal income growth is even better it's slightly over 7% and with inflation only at 3% that's you know very good growth in people's real you know income and so I think again the economy is in Mexico is doing much much better than in parts of the country.

I believe puts us in the top five states are rate of personal income growth so personal income growth which brings a huge smile to the face of speakers on what? Sure does because if people have money they can educate their children. Yes certainly education is a key. Well thank you very much gentlemen it's unfortunately enough discussion here for several more programs but our time is up. Thank you for participating in this forum and thank you for joining us for this K&M Public Affairs Special Report. I'm Elizabeth Martinez. Good night.