Diversifying the economy: the town deals with the closing of Cobre mine

New Mexico Business Journal, Jan-Feb, 1999 by Dennis Wall

Until recently, Silver City has made its living from the earth, enjoying the quiet, rural lifestyle common to communities removed from major transportation routes and blessed with limited but stable employment. Copper has for decades been king in this southwestern New Mexico town; the Phelps Dodge Corporation, with its three mines and some 1,800 workers, has for years been the leading employer.

That hasn't changed, at least not completely. Even with the recently announced closure of the Cobre mine and a combined layoff and attrition of some 540 of Phelps Dodge's miners, mineral extraction continues to be a large part of the economy. But local leaders have long recognized the need for diversification in the area, and efforts toward that have been underway for some time.

Silver City and surrounding Grant County have never been without other economic resources: there's Western New Mexico University, various government operations, including the U.S. Forest Service's regional office, and tourism. Because of these the town could, though with great difficulty, withstand the mining industry's periodic, inevitable downturns, one of which occurred in the early '80s. That event, says Silver City finance director Dennis Hunter, "decimated the town."

Then, the Tyrone mine southwest of town was completely shut down and much of the activity at the big Chino mine to the east was halted as well. "We didn't have the diversification then, so there was no real way to respond," Hunter says. The town rode out the troubled times, copper prices rose, and diversification occurred partly by design and partly as a result of Silver City's superbly moderate climate, which is attracting retirees with healthy pensions, as well as telecommuters wanting a better quality of life.

That influx of new residents has helped fuel the construction business, which may help provide jobs for some displaced miners. Main Street New Mexico also took an active interest in the town's Historic Downtown district, encouraging a dramatic refurbishment of the century-old rows of often-empty buildings. Where there was once a 40 percent downtown occupancy rate, according to Mike Trumbull, former Silver City/Grant County Chamber of Commerce president and motel owner, currently close to 95 percent of downtown buildings are occupied, and a variety of small businesses are providing jobs and income, and attracting a new wave of tourists.

The fate of the downtown economy may also be affected by Wal-Mart's expansion last September to "Super Wal-Mart" status. The huge store on the eastern edge of town has been expanded to include such atypical services as a travel agency, beauty shop, and the usual full-service grocery operation. Though the store's expansion may well bring people to town from outlying communities, in turn swelling gross receipts, it also threatens to hurt merchants in the Historic Downtown area, which in turn could sabotage the tourist trade there that the community has fought so hard and long to establish.

Tourism, benefiting from a healthy and growing arts presence in town (see accompanying story), will likely provide much of the non-mining economic activity that Silver City enjoys in the future. The chamber and Silver City Grant County Economic Development Corporation (SIGRED) are working with the town to encourage convention business, and WNMU has recently provided much of the infrastructure for that convention growth with construction of the Student Memorial Building which, at times, will double as a convention center. The university is making the building available to such groups as the Rotarians, New Mexico Presswomen's Association, New Mexico Girls State, the Coalition for Equality in New Mexico, and the large Governor's Conference on Tourism - all of them among the conventioneers scheduled to visit Silver City next year.

New highway construction funds will also come in handy. Fifteen million dollars of federal money will provide for a bypass around town, easing traffic jams in town and providing a link to a new industrial park that will soon come on-line; another $15 million of federal funds will fuel the expansion of Highway 180 to Deming, linking the area with I-10 and giving businesses another reason, besides the area's climate and positioning on the edge of the country's first designated national wilderness, to move their operations here.

Economic developer Cheryl Pink of SIGRED says links are being forged internationally with the community as well, particularly toward the south. The town recently hosted a NAFTA Institute conference that was attended by 60 people, half from Mexico, the other half from New Mexico and other states. The conference dealt with learning how to do business across the border, including gaining a better understanding of Mexican culture.

"They learn, for instance, that in Mexico, personal relationships probably open or close a lot of doors to Americans without them even realizing it," Pink says. "They also learn such things as how to live in Mexico and have a happy family there, about personal differences, along with such things as how to get the utilities turned on, basic stuff."