Th business climate remains excellent

New Mexico Business Journal, Dec, 1995

And-surprise-five distinguished economists concur.

Everyone knows the state's economy is growing. People around Albquerque, Rio Rancho and Santa Fe know by the building and development literally going up around their ears. The New Mexico Business Journal contacted several of the state's best economists. We asked each economist the same set of five questions about the economic health of the state. They concur that we are healthy and will remain so for the foreseeable future.

1 Why should a company choose New Mexico as its base of operations?

Radosevich: A highly productive and available work force, low operating costs and a high quality of life. Competitive incentive programs include In-Plant Training, Manufacturing Investment Tax Credits and Industrial Revenue Bonds. The state's location and effective infrastructure will give companies a foot up on the competition when going into the Mexican or growing Southwestern markets.

Coppedge: A quality of life that few of our more urbanized cousins across the country share. An admirable work ethic; New Mexico workers are generally perceived by their employers to have a good-to-excellent attitude toward work and good-to-excellent productivity levels. Location with respect to a growing population and economic base in the West, Southwest and Mexico.

Harris: The overall political and fiscal stability of state government; accessible state government officials; relatively low operating costs; centralized location for North American operations; educational facilities that provide a trained work force an opportunity for continuing education and improving skills levels, and the quality of life for management and work force.

Sohn: Within close proximity to the West Coast and Mexico, New Mexico has a pro-business attitude. It has low labor costs and widely accessible technological expertise from the federal labs.

MacDonald: A highly productive, available labor force, relatively low wages, low business taxes and a high quality of life. A business can compete in the global economy and earn a fair profit. It offers generous economic development tax incentives. Its corporate income tax rate compares favorably to Arizona, Utah and California. Manufacturers who export their products from the state are exempt from the gross receipts tax. The gross receipts tax on the services industries may present a burden, but New Mexico has dealt with this issue by exempting telecommunications services and clarifying the gross receipts taxation of research and development services.

2 What are the economic indicators that lead you to believe the New Mexico economy is a good business climate?

Radosevich: The manufacturing sector looks good. New Mexico was in the top 10 states in personal income growth between 1993 and 1994. New Mexico was 4th in new job creation between 1993 and 1994. It did well in natural gas sales, especially exported outside New Mexico; electric sales also reflect a robust economy. New Mexico's unemployment rate is lower than the U.S. average; it has competitive labor rates, and increased Severance Tax receipts reflect improvements in the mining industry.

Coppedge: Surveys of businesses in Artesia, Portales, Silver City, Deming and Torrance County show that business operators rated their employees as productive and with good attitudes toward work. These businesses felt their community was a good place to operate.

Harris: Recent growth in private wages and salaries, personal income and nonagricultural employment, as well as growth in non-government sectors of the economy; recent declines in workers' compensation rates, and New Mexico's ranking of first place nationally in five-year export growth.

Sohn: Rapid employment and population growth, as well as expansion in the high-tech manufacturing base. These have in turn sustained robust retail sales.

MacDonald: The migration of new private sector businesses to the state, including the high-tech manufacturing industry; the teleservices industry; a growing biomedical industry, and the food processing industry around the state. With the exception of 1986 to 1987, after the second oil price break, New Mexico's economy has consistently outperformed the U.S. economy. Since 1973, Albuquerque job growth expanded on average at twice the national rate.

3 How would the New Mexico economy fare during a U.S. economic slowdown?

Radosevich: New Mexico's economy has neither enjoyed quite the highs nor suffered the lows as markedly as the national economy during U.S. economic slowdowns. I would expect this trend to continue.

Coppedge: New Mexico has been relatively insulated because of its strong reliance on the federal government and abundant and valuable natural resources. The state's natural resources no longer provide either the employment or the tax base of the past. Cutbacks in federal programs will sensitize the state's economy to U.S. economic slowdowns. Just how sensitive will depend on the specific reasons for a given U.S. economic slowdown.

Harris: Recent economic slowdowns have tended to be regional in nature rather than nationwide. The impact of a recession would probably be less severe in New Mexico. If a national slowdown is caused by a slowdown in exports or weakness in the manufacturing sector, the New Mexico economy would be insulated. Commodities markets tend to follow their own cyclical patterns, therefore rural New Mexico may be protected due to its reliance on crude oil, natural gas, coal, copper and agricultural production. The state strongly relies on government employment, which tends to protect it from cyclical changes in the national economy. Tourism and associated industries may help insulate the state's economy.