A cool business climate

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By Harold Morgan

In the bottom center of the map lies New Mexico, a light orange blip in a sea of blue. Our distinctiveness bodes ill. The map shows state business climates based on a survey of 650 business leaders by Chief Executive Magazine.
Our light orange places us between two deep blue states, Texas and Arizona, respectively first and 10th in the survey. We rank 33rd in the 2012 survey. See chiefexecutive.net/best-worst-states-for-business-2012. On the map, New Mexico gains attention in a subtle way. We are one of two states between the left (er, west) coast and the Mississippi River to place below 31st in the CEO estimation. Minnesota is the other.
The magazine survey, being a survey of people, however informed and thoughtful, remains just a survey, short on data. The Brookings Institution and the CNBC Top States for Business report fill the gap.
Though Brookings only considers Albuquerque, the use of location quotients offers statewide insight, given that Albuquerque plus Santa Fe are half the state. Location quotients compare the given area’s concentration of employment in an industry to the national average.
For the third quarter of 2012, Albuquerque’s government and construction employment were well above the nation. Excellent reasons exist for some of the extra government, such as research by military personnel on Kirtland Air Force Base. That construction remains with higher than average employment, even after years of declines, suggests further reduction.
Albuquerque manufacturing employment is about half the national average. Not good. The proportion of manufacturing employment has dropped 40 percent since 2000, while government (public administration) is up 40 percent. Ugly.
On the CNBC ranking, we tied Kentucky at 36. CNBC uses 43 measures of competitiveness gathered into 10 categories and weighted according to state use in economic development marketing material. The categories are weighted. Cost of doing business, workforce and quality of life share the highest possible totals, closely followed by infrastructure and economy. Education, technology and business friendliness are well behind.
For eight categories, New Mexico’s rank isn’t awful, ranging from 13 for infrastructure and transportation and 15 for the economy to 31 for cost of business and 32 for the technology and innovation.
Our performance in two lighter weighted categories pulls down New Mexico’s overall rank.
“Education and business go hand in hand,” CNBC said. Not only do companies want to draw from an educated pool of workers, they also want to offer their employees a great place to raise a family. Higher education institutions offer companies a source to recruit new talent, as well as a partner in research and development.
The business friendliness comment is, “Regulation and litigation are the bane of business. Sure, some of each is inevitable. But we graded the states on the ‘friendliness’ of their legal and regulatory frameworks to business.”
A bazillion business climate studies must exist. Our rank on a given study is not the point. Rather, it is the consistency of the rank. Whatever the report, we are down, sometimes way down. Our neighbors, typically Texas and Utah and sometimes Arizona, are at the top.
Change is possible. CNBC points out states with big improvement. Gov. Martinez has started work on education. But on the scale of things, her passion for illegal immigrant driver’s licenses wastes time.