More and more manufacturers from around the country and the world are starting to notice New Mexico as a leading center for commerce, industry, and trade. Thanks to a new business-friendly attitude, New Mexico continues to grow as an ideal location for manufacturers to produce their goods with access to more markets around the country and the world.
A more business-friendly environment, an improved tax climate, a capable workforce, and leadership that seeks to harness the power of a diverse economy – all contribute to this growing success. Governor Susana Martinez and economic development secretary Jon Barela are pursuing smart policies and developing strategic relationships to bring business leaders and innovators to the state, creating strong partnerships as they continue to diversify New Mexico’s economy and reduce reliance on spending from the federal government.
What’s even more remarkable is that these bold reforms were just the beginning. When Governor Martinez took office in 2011, New Mexico had virtually no closing fund, which is used to grow existing businesses and attract new ones from other states and countries. Under Governor Martinez’s leadership, New Mexico has now increased this critical resource to $37.5 million (known as Local Economic Development Act, or LEDA). This is a bold approach to helping businesses thrive with the infrastructure they need to succeed.
Tax Reform – Bold Change and Smart Spending
When Governor Martinez took office, years of wasteful spending and mismanagement left New Mexico with the largest structural deficit in state history. Many urged her to raise taxes to fix the problem. Instead, by working in a bipartisan manner to prioritize spending, she balanced the state budget without raising taxes. Since then, Governor Martinez has cut taxes 24 times while enacting a balanced budget five years in a row – every year she has been in office so far.
Tax reform has been an important piece of New Mexico’s newfound success. Just a few years ago, renowned professional services firm Ernst & Young called New Mexico one of the worst in the region for its taxation of manufacturers.
When Governor Martinez took office, she pursued a bold agenda of reform, working in a bipartisan manner to overhaul New Mexico’s outdated and cumbersome tax code. The result was hailed by the Democratic chairman of the Senate Finance Committee as “…the closest thing we’ve had to true, total tax reform.” Governor Martinez enacted a single sales factor, reduced New Mexico's corporate income tax by 22 percent, from 7.6 to 5.9 percent over five years, and ended the practice of tax pyramiding. Following these reforms, Ernst & Young took another look at New Mexico, and recognized the state as the best in the west for taxation of manufacturers. The state was also recognized for “Outstanding Achievement in Tax Reform” by the Tax Foundation, a nonpartisan policy research group.
“We had a choice: we could have kept doing what we had always done. Or we could make bold changes,” said Governor Martinez. “We knew we had to become more competitive with neighboring states, and we were able to do it in a bipartisan way. Now we are competing with our neighbors like we never have before, and it’s showing great results for our families, communities, and businesses.”
Following Governor Martinez’s reforms, the New Mexico Partnership, the marketing and business development agency responsible for locating and expanding businesses in the state, reported a big spike in interest from companies looking to relocate or expand. To further support this interest in New Mexico, Governor Martinez’s administration has grown the state’s closing fund and continued to support its Job Training Incentive Program (JTIP). JTIP is critical to helping small businesses grow, so they can hire more New Mexicans.
“The Partnership works together with the Economic Development Department to structure the best deal for businesses, which includes incentives like JTIP and LEDA funding for infrastructure, to make New Mexico the most attractive place to operate,” said New Mexico Economic Development Cabinet Secretary Jon Barela. “New Mexico is much more competitive because of our tax reforms combined with our existing incentives.”
In Governor Martinez’s first year, she eliminated the gross receipts tax (GRT) on diesel fuel sales, incentivizing Union Pacific to build its first, new rail facility in more than a century in Santa Teresa, New Mexico, choosing it over a location in Texas. This new half-a-billion dollar investment in New Mexico is a state-of-the-art intermodal rail facility that will employ 600 workers.
To further support New Mexico’s growing aviation industry, the GRT on aircraft maintenance and parts was eliminated. Previously, pilots traveled out of state to have their aircraft serviced because of this tax. New Mexico’s aircraft maintenance economic impact was only $88.7 million; the eighth lowest in the country despite the state’s ideal environment for general aviation. The GRT on commercial aircraft sales was eliminated, encouraging sales of aircraft, which has a direct impact of more than $10.5 million and immediately created 125 new jobs between two companies in Roswell’s International Air Center.
Companies across the world are making it clear that New Mexico is the right place to do business. Comcast chose to expand their New Mexico operations by 300 jobs. Google acquired New Mexico’s Titan Aerospace and is expanding manufacturing in Moriarty, which is just outside of Albuquerque. MCS Industries, one of the largest manufacturer of picture frames for major retailers, expanded in Santa Teresa. These are just a few examples.
A Leader in International Exports
New Mexico’s export policies and growth are rapidly gaining national and worldwide attention as its trade numbers continue on a sharp upward trajectory. Things began to change dramatically for the better in 2012, when New Mexico moved from 38th to first in export growth in just one year, and this momentum continues today.
The U.S. Department of Commerce recently announced that New Mexico leads the nation in export-related job growth, at 107 percent. This comes on the heels of data showing that the state nearly doubled exports to Mexico last year. More New Mexico businesses are also exporting more products to more places than ever before. In 2014, New Mexico set yet another all-time high in total exports, at nearly $4 billion, and created nearly 16,000 jobs in New Mexico in the last year. This is New Mexico’s strongest job growth since 2006. New Mexico is now ranked 19th in the nation in private-sector job growth.
When Governor Martinez first came into office, states as far away as New Hampshire were doing more business with Mexico than New Mexico. Not anymore. Since then, New Mexico has nearly quadrupled exports to Mexico, and in 2014, New Mexico was number one in the country in export growth to Mexico, increasing by an extraordinary 93 percent over just one year.
Border Development
In addition to the diesel fuel tax exemption that prompted Union Pacific to locate in New Mexico, Governor Martinez created a now 12-mile overweight cargo zone to allow overweight trucks from Mexico to enter and unload on the New Mexico side of the border. As a result, New Mexico ports of entry have experienced record-breaking commercial crossings each year, and several companies have moved to New Mexico’s border region.
With the Union Pacific facility in Santa Teresa and the 640-acre Foxconn manufacturing plant that ships 55,000 Dell computers to the U.S. and Canada from San Jeronimo, Chihuahua, just a stone’s throw over the border, this area is well-positioned to attract large, global industrial and commercial businesses. In 2013, Governor Martinez, Secretary Barela and their Mexican counterparts jointly announced plans to establish the first-of-its-kind 70,000 acre binational community around the Santa Teresa-San Jeronimo border crossing. Plans include residential and retail development, industrial infrastructure, state-of-the-art energy and water sustainability technologies, as well as quality of life and workforce development projects.
New Mexico is now positioned to be a major gateway of trade between the Americas. New Mexico is halfway along the 2,000 mile U.S.-Mexico Border and centrally located between the NAFTA countries, making it one of the best locations in which to sell goods and services to international markets. The dynamic border town of Santa Teresa is the eastern-most land port along the border and it is much easier and less expensive to build infrastructure over land than a river.
Governor Martinez and Secretary Barela have worked to build strategic relationships across borders. They maintain close working relationships with counterparts in Mexico. Just recently they joined Mexican President Enrique Peña Nieto and Chihuahua Governor César Duarte to celebrate the opening of a major highway infrastructure project which will help improve movement of goods between Mexico and New Mexico. More joint planning efforts are underway to align infrastructure to accommodate growth along both sides of the border.
As New Mexico continues to grow as a leader in commerce, industry, and international trade, it is clear that a bold, reform driven agenda, combined with strategic cross-border relationships and a business-friendly attitude are paying dividends for the state’s businesses and citizens. Those looking to grow and expand would do well to give New Mexico a strong look, or they might find themselves left behind.
For more information:
New Mexico Partnership
1720 Louisiana Blvd NE, Suite 312
Albuquerque, NM 87110
505 247 8500
nmpartnership.com
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