Quest for Tesla plant highlights ABQ’s meager job growth

ALBUQUERQUE (KRQE) – As the people charged with bringing new jobs to New Mexico and Albuquerque pull out the stops to lure Tesla and its so-called “gigafactory,” two economic reports show just how badly the jobs are needed.

The annual five-year forecast prepared for the city of Albuquerque says it could be 2018 before the city gains back the estimated 27,000 jobs it lost during the Great Recession.

And a group convened by the New Mexico Legislature authored a study that shows lawmakers think the state may not complete its recovery until 2024.

The reports – and the stories of the people, businesses and government institutions behind them – underscore how hard the state and its largest city have been hit by the worst economic slowdown since the Great Depression.

Albuquerque Mayor Richard Berry says the forecast serves as a signpost for city planning.

“We need to be in the business of recruiting and retaining jobs here,” Berry said in a recent interview.

Previous Coverage:

The mayor is quick to point out the report’s bright spots.

“We’re in the best position we’ve been in in seven years,” he said.

But Berry acknowledges that the forecast shows the city still faces financial challenges.

Specifically, the report warns that, without cutting city services, Albuquerque faces a $7.4 million dollar deficit in the coming fiscal year, which begins July 1. Under the same conditions, that deficit is projected to grow to $83.8 million in the first half of 2018.

First In, Last Out

New Mexico has been been relatively unscathed by economic slowdowns through the years — the state has experienced shallower recessions than those seen in many other states. That’s largely because the New Mexico’s economy has been cushioned by government jobs.

Influential federal representatives including Pete Domenici, Jeff Bingaman, Clinton Anderson and Tom Udall for years ensured that New Mexico has been a “last in, first out” state during recessions.

But the recession that began at the end of 2007 was so deep and so sudden that governments from the federal level down to municipalities began cutting jobs or simply letting vacant positions stay that way.

Albuquerque and the rest of the state took a major hit.

“We were first in and we’re last out on this recession,” said economic architect Mark Lautman. “And we’re still not out.”

Lautman works in what can be described broadly as the economic development industry. As an economic architect, he makes money by helping communities find what he calls economic base jobs.

Sandia National Labs, Intel, many utilities, health service companies and hospitals are economic base employers, according to Lautman. For every job at each one of those employers, at least one additional job is created in the community. As a result, income levels across the community rise along with quality of life.

Those are the jobs he’s hunting.

“These are jobs where the products and services produced by Albuquerque residents are sold outside the economy,” Lautman said. Essentially, the jobs draw new money into the local economy.

In the last year, the New Mexico Legislature hired Lautman to work with its Jobs Council to bring those economic base jobs here. Lautman and the legislators came up with a number: 160,883 new economic base jobs by 2024.

More than half are expected to come from Albuquerque and the counties that make up the Metropolitan Statistical Area – Bernalillo, Sandoval, Torrance and Valencia.

The council’s report says medical services, digital media and entrepreneurial businesses employing one or two people need to be strong growth areas in Albuquerque.

Arms Race

To land the companies that will bring those jobs, communities are offering them more tax breaks, more training incentives and other perks to make setting up shop New Mexico more attractive.

“There’s a little bit of an arms race right now to attract good jobs to communities,” Berry said.

Lautman noted that the very idea of economic development through incentives can be unseemly to taxpayers.

But both men – who are not officially working together in any capacity – share the view that communities sometimes have to spend money to make money.

“You have to make decisions,” Berry said, “and there’s always a trade-off” between how much revenue communities are willing to spend or give up to get businesses and how much revenue those businesses generate.

Freewheeling with taxpayer-funded enterprise funds or economic development can be costly and unproductive. But Berry warns there’s a downside to playing it safe as well: “Do you make yourself so uncompetitive trying to keep hold of those resources that you have today that you forgo those future opportunities?”

Berry and Lautman favor investing in economic development. Both men admit failures are part of the effort.

Schott Solar at Mesa Del Sol was considered a huge win for economic developers, Lautman among them. But overseas competition shuttered the plant less than five years into its existence. The city was able to recover several million dollars from Schott. That money has been placed in what developers call a closing fund to help seal deals from other companies looking to relocate to Albuquerque.

Back on The List

Even if New Mexico fails to land the multi-billion dollar Tesla battery plant, there may still be an upside just from having been considered.

“We’re back on the list,” Lautman said.

When the recession hit and New Mexico began cutting costs to make up projected budget deficits, the state dropped off the radar of many site selection consultants.

Lautman likens the Tesla process to being nominated for an Academy Award. Just being nominated brings much-needed attention from projects that may not have considered New Mexico and Albuquerque before hearing about Tesla.

 

blog comments powered by Disqus