Archive for the ‘MVEDA Reports’ Category

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Thank you to all who attended Tuesday’s Business on the Border Luncheon where Dr. Chris Erickson from NMSU provided his economic outlook and forecast for Las Cruces and the region.  Dr. Erickson presented employment information illustrating that although Las Cruces has fared better than both the national average and New Mexico as a whole, in terms of employment growth, we are still behind our peak employment numbers experienced in the mid 2000’s.  Dr. Erickson stated that it will take approximately three years to catch back up to those previously experienced levels.   Dr. Ericson also commented that although it appears that the country as a whole is moving out of the current recession, which has lasted a staggering 20 months, we must nevertheless not rule out the possibility of a double dip recession.  If you are interested in a copy of Dr. Erickson’s presentation, it can be downloaded by clicking the graphic.

From an economic development perspective we enter the new fiscal year cautiously optimistic.  Over the past fiscal year, MVEDA has developed over 100 leads and over 45 initial site visits.  We also carry forward a strong pipeline of projects which we believe have a strong chance of closing in the coming fiscal year.   We are also experiencing much more diversification amongst the types of industries that have expressed interest in the region.  MVEDA’s top 10 active prospects include 3 manufacturing companies, 2 aerospace companies, 2 renewable energy companies, one food processing company as well as one high tech company.   Together these 10 prospects potentially could create the need for over 2,000,000sf of space and create as many as 600 to 700 jobs.

We are also beginning to see some recurring themes in terms of the anecdotal data we pull from prospects.  For example, whereas over the past fiscal year it appeared financing was the leading driving indicator of a business’ locate decision; we are now seeing more inquiries once again surrounding work force needs.   Additionally we are receiving more inquiries for build-to-suit opportunities as opposed to existing inventory.  Both questions lead us to believe that access to capital is slowly becoming more available which should bode well for economic development initiatives.

This past fiscal year, we also showed success in developing opportunities within the rural areas of the County.  MVEDA conducted site visits to Hatch, Rincon, Anthony, Chaparral, Santa Teresa and Sunland Park amongst other locations.  We are proud to say that one of these actually led to the “locate” of Universal Plastics in Anthony, NM.

Although optimistic, we cannot lose sight that there is still much to do to spark economic development within the state and region. The MVEDA Board of Directors and staff met last week to outline our strategic plans for the new fiscal year.  At the session, MVEDA updated its regional economic development SWOT analysis and recognized that although we have been successful in addressing many of our economic development weaknesses, there are several new arising threats and barriers that we must be aware of.   They include:

1. Uncertainty of a new administration:  A new administration always puts pause in private sector decision making.  Will the next administration be business friendly?
2. Uncertainty of business attraction incentives:  Recently the State has been experiencing budgetary challenges with its most “tried and true” incentive; Job Training Incentive Program (JTIP).  Recent changes have lowered the reimbursable amount on JTIP funding in urban areas (ie…Las Cruces) from 50% to 30%.  Incentives such as JTIP are the only tools most economic development programs across New Mexico have to be competitive in business attraction.  Will they be further reduced?
3. Regional and Local Incentives:  Serious consideration needs to be placed into the development of localized incentives for economic development.  Communities throughout the country, especially in Texas have economic development funds by which they can tap into for job creation.
4. Border competitiveness:  Recently El Paso announced the acquisition of 1,000 acres of land in Tornillo for the development of an industrial park with a port of entry which they will break ground on in 2012.  How will this affect our port of entry and future economic development opportunities in Santa Teresa?

These are challenges that MVEDA recognizes and, as an organization, must consistently retool our marketing efforts and plan strategically to deal with new challenges that arise.  And we can only hope that a “double dip” by the national economy is avoidable.

I look forward to seeing everyone at our next Business on the Border Luncheon where MVEDA will be providing a year end re-cap.  We will also have a guest speaker from the New Mexico Small Business Assistance Program which is a program that leverages technology and expertise at our National Laboratories and can provide up to $20,000 in technical support to companies in the region.

MVEDA’s Business on the Border Luncheon this past Tuesday featured a group of commercial lenders who addressed some of the obstacles to obtaining financing faced by today’s business owners.  Our panelists/speakers included Kim Hakes from Citizens Bank, Michael Cheney from Wells Fargo, and Clyde Hudson from USDA, each providing perspectives on the state of available financing in today’s economy.   We thank them for taking their time and expertise they provided to the group.  Access to financing is a subject matter that is not only important for the sustainability of all local businesses, but it is also extremely relevant with respect to economic development and business attraction.

Photo by Gabriel Vasquez, Las Cruces Bulletin

We find that as economic developers, we are being asked more and more to find localized financing solutions to companies looking at expanding into the region.   This is a significant shift from just two years ago when the primary concerns of clients were workforce labor and real estate.  Therefore it was positive to hear from our banking panelists that they were beginning to see a recovery in commercial lending and it was great to hear from Mr. Hudson how active USDA has been in their lending programs during these challenging economic times.

At MVEDA, we are also looking to identify and work with programs that might assist with business financing needs.  We are also pro-actively marketing and promoting the business assets we have in the region that make us great destination for certain industries.  In mid-March, MVEDA joined the Greater Las Cruces Chamber of Commerce and New Mexico State University as part of a delegation that went to Washington, D.C. to promote and support activities at White Sands Missile Range.  In April, MVEDA will be participating in two aerospace tradeshows, Space Access 2010 in Phoenix, and the National Space Symposium in Colorado Springs.  This is part of MVEDA’s continued support of Spaceport America and growing our commercial aerospace potential.  Finally, in the last week of April, MVEDA will be attending the International Asset Management Council (IAMC) Conference which is made-up of leading site selection consultants and corporate real estate decision makers from throughout the country.

MVEDA’s lead generation is still very active led by the renewable energy cluster which makes up 34% of all of our leads for the year.  This past month showed stronger industry balance in new leads generated with the biggest increase in lead generation found in the business/finance sector.

MVEDA’s Business on the Border Luncheon on March 2nd featured a commercial real estate update.   The discussion shined a positive light on the economic environment surrounding the real estate market and where we can be looking for opportunities ahead.

The panel consisted of:  John L. Hummer, Owner/Broker with Steinborn TCN Commercial Real Estate; Gil Jones, Associate Broker with NAI 1^st Valley Commercial Real Estate; Donnie Brainard, President/Qualifying Broker with Alameda Property Group; and Rick Stoes, Managing Director for Grubb & Ellis.

Economic highlights from the discussion included:

• National and regional retailers are beginning to show activity,
• Improvement in new store openings and slowing of store closures compared to last year,
• Strip retailers are more aggressive on store openings,
• Stabilization of lease rates,
• Growth at Ft. Bliss expected to boost regional economy by $4 billion annually,
• Significant increase in venture capital money looking to be placed. Majority of which is coming out of Mexico, and
• Conventional financing will continue to be difficult to obtain.

The panelists graciously agreed to let us post their presentations and they can be down-loaded by following these links:

• John Hummer’s presentation (PDF – 570 KB)
• Gil Jones’ presentation (PDF – 935 KB)
• Donnie Brainard’s presentation (PDF – 1.5 MB)
• Rick Stoes’ presentation (PDF – 1.3MB)

As for the first two months of 2010, MVEDA’s lead generation activity has been quite high.  Entering the month of March, our lead generation is 176% higher than this same time last year, and our prospect activity is at 111% of our YTD goals.  In the month of February alone, we had over 14 new leads and 5 site visits by companies interested in the region.  Renewable energy continues to lead the way representing 1/3rd of all our new lead generation, followed by manufacturing and logistics firms.  Over the past couple of months we have also seen some increased interest in the aviation and aerospace sectors.

MVEDA’s marketing efforts remain aggressive.  Since mid-January, MVEDA participated in two prospecting missions with the New Mexico Partnership to Southern California and Dallas regions.  We also attended the Medical Design and Manufacturing Trade Show in Anaheim and participated in the National Security Technology Conference that took place in Las Cruces last week.

Although lead generation and prospecting activity is quite high, the difficulty in closing deals and in job creation surrounds financing.  This became a topic at our Business on the Border luncheon and has been a growing challenge over the past year.  As economic developers, we are being asked more and more to identify financing solutions for our clients which as a result is forcing us to identify alternative financing routes, such as through State and Federal programs, or through equity programs and grants.  Suffice it to say that this will be a continuing discussion, but enables us to retool, as well as, rethink strategies that will create new opportunities and future growth in Dona Ana County.

Happy New Year and welcome to 2010.  As we start a new year it is always important to reflect upon the past year’s events, both the challenges and the opportunities, and use these experiences to change strategies and/or direction where they are needed to become more productive and successful.

We started 2009 with what I believe were a greater amount of “unknowns” than “knowns”;  fears following a stock market crash, government bailouts, mass foreclosures, growing unemployment rates, and discussions of a recession was the topic of many conversations.   These were the challenges over the past year that all communities, businesses, and economic development agencies had to deal with, not just MVEDA.  As a region, Dona Ana County was not immune to this crisis.  We began the year at 5.5% unemployment and ended the year hovering around 7%.  However, compared to a 7.8% unemployment rate at the State level and a 9.4% rate at the national level (as of November), Dona Ana County actually fared pretty well.  And although we experienced the loss of a large employer with the Frontier Airlines’ reservation center closing here in Las Cruces, we were also balanced by increases in hiring by other service centers including Sitel, CyraCom, and Convergys.  We also experienced some decline in production/manufacturing jobs and the loss of Multi-Plastics.  However, we also experienced an unprecedented level of interest by companies in the emerging alternative energy sector which has led to some key opportunities; earlier in the year eSolar and NRG Energy announced a 92 megawatt solar project for Santa Teresa and earlier today, Johnson Plate and Tower announced their plans to build a wind tower manufacturing facility, also in Santa Teresa.    Sapphire Energy has invested $8 million in its research and development facility at the Las Cruces West Mesa Industrial Park and will invest another $100 million in Southern New Mexico to produce biofuel from algae.  Along with other alternative energy groups who have identified the region for their projects, Dona Ana County could realize up to 200 new jobs and up to $300 million dollars in new capital investments in the years to come as a result of 2009 activity.

At MVEDA, we enter 2010 optimistically.  After dropping out of the top five rankings of the best performing small cities by Forbes and the Milken Institute between 2002 and 2006, the Las Cruces NM MSA has again made the list of the Milken Institute’s top ten “Best Performing Small Cities.”  As Spaceport America comes on-line and if some of the other projects in our pipeline materialize, it should lead to regaining a top five position in the near future.

But we also realize that we have not yet fully escaped the economic crisis of the past year.  We know that economists are now beginning to talk about a recovery.  We know the current holiday shopping season experienced a 3.5% increase over last year’s holiday season illustrating an increase in consumer confidence.  We know from reports that foreclosure numbers will decrease from the levels experienced in 2008 and 2009.   We also know we have a pipeline of projects and companies that we are working with who are considering the region for growth.  We know that there is a growing alternative energy industry with its eyes on New Mexico and that MVEDA has been aggressive in gathering the attention of this industry.  But we also know that we still have a lot more to do.   But at least we enter the New Year with a few more “knowns” than the “unknowns” of 2009.

Reports released by the New Mexico Taxation and Revenue Department indicate that the Dona Ana County economy continued to struggle during the third quarter of 2009.  According to the report, total reported gross receipts for all industries were flat when compared to the third quarter of 2008.  For the first three quarters of 2009, total reported gross receipts are 2.4% lower compared to 2008.

Total reported gross receipts from retail trade showed improvement during the third quarter, increasing 4.3% when compared to the third quarter of 2008. Year-to-date total reported gross receipts from retail trade for 2009 are down 2.7% compared to 2008.

The construction sector continues to be very soft.  Although there were no additional job losses between the second quarter and third quarters of 2009, total reported gross receipts from construction and mining were 16.9% lower in the third quarter of 2009 as compared to 2008. Year-to-date total reported gross receipts in construction and mining for 2009 are down 9% compared to 2008.

Compared to the third quarter of 2008, new single family residential permit valuations issued in the county increased 21.6% for the third quarter of 2009, but are down 12.3% through the first three quarters of 2009 compared to 2008. According to data from the Las Cruces Association of Realtors Multiple Listing Information Service for the month of September, 2009 the number of new and existing home sales increased 21.9% compared to the month of September, 2008. In comparison, the average sale price dropped 12.1%, from $228,447 to $200,738.

According to data from the U.S. Bureau of Labor Statics, Dona Ana County’s unemployment rate in September, 2009 was 6.9%, down from 7.3% in June. This is significantly lower than the national rate of 9.8%, and lower than the state rate of 7.7%.  A recent report by the Milken Institute ranking the Las Cruces MSA in the top ten best performing small metros seems to indicate that this trend may continue.

Using a variety of sources, MVEDA tracks and reports changes in labor force, employment, construction permits and total reported gross receipts on a quarterly and annual basis. These economic indicator reports are available on MVEDA website.  The report for the third quarter of 2009 is attached and will be posted on the website in the near future.

Detailed New Mexico gross receipts tax files are available on UNM’s Bureau of Business & Economic Research website. Current and historical labor force data for Dona Ana County (Las Cruces NM MSA) are available on the Bureau of Labor Statics’ website.