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War in Ciudád Júarez has brought economic improvement in El Paso. The Júarez drug violence has pushed the city’s famous nightlife north across the border into El Paso. Retail activity has come along.
The insight came Friday, August 13, in Las Cruces at the 2010 Business Owners and Entrepreneurs Symposium. Sponsors were the Arrowhead Center at New Mexico State University, the Doña Ana Community College Small Business Development Center and the New Mexico Procurement and Technical Assistance Program. About 75 attended this year’s symposium, held at the Farm and Ranch Museum.
The symposium also offered an excellent introduction to the horrors of Obamacare.
For El Paso and Las Cruces, maquiladora employment offers another bright spot. Júarez had 164,613 maquila jobs at the end of 2009, reports Southwest Economy, a publication of the Federal Reserve Bank of Dallas.
Output from maquiladoras is beginning to grow rapidly, said Robert Gilmer, vice president in charge of the Dallas Fed’s El Paso branch. A 10 percent increase in maquiladora jobs turns into a 3 percent increase in El Paso employment. Maquiladora growth also increases El Paso employment in transportation, retail and services.
Las Cruces shares the bounty, though numbers are sketchy, by being across the street from El Paso. One example is a freight-forwarding facility, immediately across the border at Santa Teresa from the Foxconn manufacturing plant just inside Mexico. Expeditors International, a Fortune 500 firm, began with 90,000 square feet.
Fort Bliss has been the saving grace for El Paso and Las Cruces. Fort Bliss spending hit $1.5 billion last year with 40 percent to local contractors. During 2009, an additional 2,400 troops arrived with 14,000 expected the next couple of years. From 2010 to 2012, base spending is expected to be a mere $500 million annually.
With the Fort Bliss expansion, Las Cruces has become even more of a bedroom community for El Paso.
About 12,000 Las Crucens commute to El Paso, estimates John Hummer, owner of Steinborn TCN Commercial Real Estate.
What is not happened since 2007 in Las Cruces, Gilmer said, are the “equity-driven relocations.” These were people who had sold a house in California and came to buy a smaller house and start a business.
Nor is much happening in the way of an economic recovery, nationally and in New Mexico.
Las Cruces is the only New Mexico metro area adding jobs today and with a per capita income increase in 2009.
Because the national recession began with a financial crisis, recovery will be slow, Gilmer said. Recent and national unemployment rate declines are partly a result of discouraged people leaving the labor force, he said. Some new jobs are happening with tiny companies whose “employees” escape the payroll employment numbers.
Bank lending isn’t happening much in New Mexico as of the first quarter of 2010, said Ken Martin, one of NMSU’s Three Amigos team of economists who track the economy.
(The other amigos are Jim Peach and Chris Erickson.)
Total loans and leases by New Mexico banks dropped 10.5 percent in the year ending March 2010, Martin said. After a 4.5 percent jump the previous year, the decline is a 15 point swing.
The continuing state government financial drama poses another cloud.
NMSU has endured “already a sharp cut,” Erickson said. A further 5 percent hit is the guess. “This is bad news for Las Cruces,” Erickson said.
NMSU has campuses as far as 400 miles from Las Cruces, so cuts affect much of the state.
Referencing the Fort Bliss expansion, Gilmer said he would rather be lucky than good.
Outside Las Cruces, New Mexico, it seems, has neither been lucky nor good.
Harold Morgan is a columnist for New Mexico News Services.