Posts Tagged ‘logistics’

Article courtesy of the Las Cruces Sun-News

By Brook Stockberger/Sun-News Business Editor

LAS CRUCES – “Las Cruces, manufacturing hub!”

Well, southern New Mexico’s largest city might not gain that moniker anytime soon, but the reality of an operating Spaceport America north of town and the start of construction on a $400 million Union Pacific Railroad facility south of town, has spurred increased interest in Las Cruces among manufacturing and logistics companies.

According to a recent quarterly report, the Mesilla Valley Economic Development Alliance says that 65 percent of all new leads are in the manufacturing sector.

“This is a great area to be growing in because manufacturing/logistics generally involves paying local people and local suppliers to make things that people outside the region pay for,” said Christine Logan, economic development administrator for the city of Las Cruces.

L&M Radiator and Alaska Structures both moved into town and created manufacturing jobs. That was welcome news that came on the heels of a stretch last decade in which Las Cruces lost Parkview Metals, Rea Wire Magnet Wire and manufacturing jobs with Taylor Precision Products. “Both of these companies moved from El Paso to Las Cruces,” Logan said. “A big factor was that we had facilities here that they could move into and expand their operations. A recurring theme in the city’s economic development efforts has been the need for existing industrial space.”

Minnesota-based L&M had a facility in El Paso, but outgrew that location and turned its eyes north across the state border. “Our business has seen a tremendous amount of growth over the last year,” L&M Radiator President Dan Chisholm said when the company decided to move. L&M, which makes cooling systems for heavy machinery, is leasing about 52,000 square feet of manufacturing and warehouse space on South Valley Drive.

In addition, TE Connectivity, an electronics component manufacturer, will relocate 100 jobs to its Santa Teresa plant from El Paso. “In the next three years, we’re hoping those 100 jobs grow to 250,” said Jerry Pacheco, vice president of the Border Industrial Association.

According to the city’s most recent economic development report, the manufacturing business category makes up just 1 percent of the businesses and 4 percent of the jobs.

Still, Davin Lopez, president and CEO with MVEDA, said that the area is increasingly showing up on companies’ radar. MVEDA works to bring companies to Doña Ana County and to help those already here expand. “We continue to see manufacturing leads increase as a percentage of total leads developed,” Lopez said. “This category also includes logistics companies. Whereas this category accounted for approximately 39 percent of all leads in the last fiscal year, we have seen it grow to 65 percent of in the first quarter of this year.”

Both Logan and Lopez said that the Union Pacific facility in Santa Teresa plays a major role. “Over the past 12 to 18 months, we have received greater interest from manufacturing and logistics firms due to the Union Pacific announcement,” Lopez said. “A $400-million-plus investment catches attention both regionally and nationally.

“It has enabled us to not only showcase opportunities in and around the Santa Teresa region but also to bring greater attention to the Las Cruces region where we happened to have existing facility space that fits the needs of some of these companies,” he said.

“We are getting more attention lately because, No. 1, we had vacant facilities to accommodate companies,” Logan said. “No. 2, there is pent-up demand for manufacturing space since no one wanted to expand or relocate in the worst of the economy and, No. 3, the proximity to the Union Pacific intermodal facility makes this a great place to locate a manufacturing facility.”

Brook Stockberger can be reached at (575) 541-5457

As many of you are already aware, MVEDA has a core, focused approach to economic development that concentrates on growing the economic base of Dona Ana County.  Economic based approaches focus on industries that export a product or service outside the region thereby bringing new dollar flow into the local economy.   It is one of the fundamental means by which a region can build and create new wealth and demand.  New dollar flow into an economy then leads to greater disposable spending that can be used to purchase the local goods and services that we rely on each day.    We have had success in this approach to economic development and as move closer to entering the fourth quarter of our fiscal year the impact from economic based industry development becomes evident; not only in job creation but in the new tax base that it creates.

For example, currently this fiscal year MVEDA has been involved in efforts that have assisted in the creation of 216 new jobs as well as the retention of 42 jobs within the City of Las Cruces with the total capital investment estimated in new construction and equipment estimated at $40mm.  Utilizing IMPLAN economic impact analysis, a 3^rd party statistical software that measures direct, indirect, and induced economic impacts, new tax revenue to the City of Las Cruces would exceed $700,000 during the construction phase and over $226,000 per year in subsequent years should employment levels be maintained.  Likewise, the increased tax revenue to the State of New Mexico as a result of these projects is estimated at over $2.3mm during the construction phase and over $347,000 in subsequent years.  Our educational institutions also benefit as a result of these economic based projects.  Las Cruces Public Schools property tax revenues could grow by as much as $200,000 per year.

Also, MVEDA is working closely with a handful of projects that have considerable impact to Dona Ana County; primarily with Union Pacific’s $400mm refueling station and intermodal ramp which would create over 3,000 construction jobs and eventually over 500 permanent, high wage jobs in Santa Teresa.  The impact of this project would create $19.9mm to the State of New Mexico and $3.5mm to Dona Ana County in new gross receipts and compensating tax paid on construction services alone.   As the State of New Mexico is currently faced with large budget deficits, the identification and creation of a new tax base becomes even that much more critical.  As evident from the above discussion, the attraction of economic based industry to the State and County is the solution.

Economic development practitioners and leaders around the United States value economic based industry growth and it is for this reason that competition continues to grow.  And even during these challenging economic times, and even with budget deficits, we see that States and regions across the country are investing more in their economic development efforts.  For example, just to the south of Dona Ana County in Horizon City (a suburb of El Paso), the city has adopted a new tax to build an economic development fund.  This is in addition to the State of Texas’ Enterprise Fund which provides the State with deal-closing dollars to attract industry.  Recently, Arizona legislators began a special legislative session to begin consideration of business tax cuts and the creation of a $25mm closing fund to attract new business to their State.   On a recent trip to Atlanta, MVEDA met with several national site selectors and two messages became clear.  First, that there would be an exodus of companies from California, and second, that Arizona and Texas had firmly placed their flag in the ground as the business friendly destination.   With less than a month left in New Mexico’s 60-day legislative session, we are hopeful that the State of New Mexico remains aggressive in the pursuit of economic development.  For this reason the Dona Ana County Legislative Coalition has been supporting the following economic development issues:

1.    Support of a State economic development recruitment budget by expanding the New Mexico Partnership beyond present funding levels, with the purpose of creating new private sector employment opportunities, creating new jobs for New Mexicans and expanding business in the State.  Currently, past year funding has been at $1.1mm.  This is a significant decrease in funding from when the program began in 2003. It is also a small budget in comparison to neighboring cities, much less other State recruitment budgets.  The Partnership also provides lead generation flow to smaller communities that do not have their own marketing budget to work with.  Rural communities that have benefited from the Partnership’s involvement have included Clovis, Roswell, Gallup, and Dona Ana County to name just a few.   To compare this funding level against some of our neighbors;

o    El Paso, TX has a recruitment program funded at about $1.5mm, and

o    The Greater Phoenix Economic Development Council has a recruitment program funded at about $4mm.

2.    Support of retaining existing economic development incentives to include:

o    Funding the State’s Job Training Incentive Program,

o    Maintaining the Technology Jobs Tax Credit, the Manufacturing Investment Tax Credit, and Rural Jobs Tax Credits.

3.    Support of regional border issues which comprise New Mexico’s second largest existing industrial base:

o    Reinstatement of the Locomotive Diesel Refuel Tax Exemption to make southern New Mexico more competitive against Texas as a bi-modal, transportation and logistics hub.

o    Creation of an Commercial Overweight Zone which will assist in attracting new logistics and distribution companies to New Mexico, &

o    Creation of a border infrastructure fund to plan, design and construct border infrastructure to allow for pro-active economic development planning.

Regardless of the outcome at the State level, we still have tremendous economic growth opportunities here in Dona Ana County.  This stems from a direct industry focused marketing approach that leverages the unique assets of the region.  They include our border logistics and port of entry with Mexico, our proximity to White Sands Missile Range, our natural assets in solar, a strong agricultural region, and the continued development of an aerospace industry with Spaceport America as its anchor.  As illustrated in the Lead Generation chart, MVEDA continues to receive diversified industry interest lead first by manufacturing and logistics, followed by renewable energy, and increased growth in the aerospace and food processing sectors.  We have also recently seen a renewed interest in high tech companies looking at the area.

In terms of performance output versus past years, MVEDA has assisted in the creation of 237 new jobs in Dona Ana County as of March 1 of this fiscal year which places us well ahead of job creation numbers in each of the past previous two years, only overshadowed by the positive economic climate of 2007-’08.  However, there remains a strong potential that we will see a handful of projects close before the end of the current fiscal year which would then create a record year for MVEDA.

As also illustrated in the Completed Projects chart, as of March 1^st we have already surpassed past years’ results in the industrial square footage taken off the marketplace and in the total capital investment that these projects have brought to Dona Ana County.

In addition to economic based industry attraction, MVEDA is working on solutions to connect local businesses to the opportunities that economic based industry brings to the region.   Therefore we were pleased to announce our first “Business Connection Series” on Monday, March 7, 2011 where SunEdison provided local vendors, suppliers, and sub-contractors with a pre-bid briefing on their 12 MW solar project at the West Mesa Industrial Park.  We are hopeful that this will be the first in a series of localized economic-based business building opportunities.

Additionally, in conjunction with the Border Industrial Association (BIA), MVEDA hosted a Business Incentives Workshop for the southern New Mexico industrial base and the CPA firms that service them.   The workshop which also counted towards CEP credit was provided by Moss Adams, a MVEDA Partner and covered, not only the details of applying for state incentives, but federal incentives as well.

As evident, even with the budget challenges at the State level, we are optimistic about the future of economic development in Dona Ana County and appreciate the continued support of all of our partners and stakeholders.

The Mesilla Valley Economic Development Alliance (MVEDA) and the Border Industrial Association will host a business incentives workshop on Friday, March 4, 2011 from 10:00am-12:00pm.  The workshop will be held in the Fireplace Room at the Santa Teresa Country Club, 75 Feathermoon Drive in Santa Teresa, New Mexico.

This workshop will cover incentives that the State of New Mexico and the U.S. federal government have in place for manufacturing and logistics companies.  The session will consist of an overview of incentives that apply to our southern New Mexico industrial base and how to access them. Companies are encouraged to register their accounting/financial people for this session. The workshop qualifies for CPE credit.

There is no charge for participating, but you must RSVP your attendance to: Adriana Castillo, 575-589-2200 or Adriana@nmiba.com.

Mexico Now, Mexico’s leading international business magazine, is hosting the “Logistics in Mexico Conference” in El Paso, Texas on Thursday, March 25, 2010. The conference will be held at the El Paso Marriot Hotel, 1600 Airway Boulevard, from 7:00 a.m. – 6:00 p.m.

Subject matter covered during the conference will include:

• Customs in Mexico and USA
• Business dynamics of 3PL
• Legal and tax aspects of the logistics industry in Mexico
• State of the art of inventory control
• The role of the federal government to improve the competitiveness of the logistics industry
• The importance of landed-cost, new product development and response to market
• Comparison of Mexico’s logistics industry costs and practices with other low-cost countries
• Industrial real estate and locations
• Local market opportunities
• Major threats to logistics in Mexico

Conference costs for manufacturers, suppliers and services vendors is US $320 plus tax and includes meals, conference materials and activities.

For more information about the event, speakers and to register online, please visit the conference website.