Santa Teresa ignites border economy - Albuquerque Journal

Santa Teresa ignites border economy

New Mexico’s border economy is booming, thanks to the success of nearly three decades of public and private efforts to build the region surrounding the Santa Teresa Port of Entry into an export mecca.

That area in southern Doña Ana County is now bustling with sustained commercial activity that today supports nearly 6,000 jobs and more than $1.1 billion in annual local economic impact, according to a new study from New Mexico State University.

Some of the activity is benefitting El Paso, located just west of Santa Teresa. But the vast majority of jobs and income have accumulated directly in communities on New Mexico’s side of the state border.

Containers parked on side roads next to warehouses in Santa Teresa in southern Doña Ana County in September 2020. Today, the area supports nearly 6,000 jobs.(Roberto E. Rosales/Albuquerque Journal)

The new study — compiled by NMSU’s Arrowhead Center and the university’s Center for Border Economic Development, or CBED — provides the first comprehensive research on Santa Teresa’s economic impact since developers began busting up the desert scrub there almost 30 years ago to turn the region into an industrial border hub for export-import operations.

Released in October, the report shows the immense success of those efforts, said NMSU research fellow Lucinda Vargas.

“Santa Teresa has become a production powerhouse for the state,” Vargas told the Journal. “We’re talking over $1 billion in annual economic impact. That’s a big deal.”

That places the Santa Teresa industrial hub among the state’s most important sources of revenue and job creation, said Jerry Pacheco, executive director of the International Business Accelerator and president of the Border Industrial Association.

“Outside of petroleum, tourism and government spending, few other sectors in New Mexico can claim to support that level of annual economic impact for the state, and that many local, good-paying jobs,” Pacheco said. “… The key message for the public is that Santa Teresa offers one of New Mexico’s best shots at diversifying its economy. We’re doing it here.”

Connector tracks link warehouses in the Santa Teresa office complex with the main rail lines.

That’s particularly important in the border region, where stable, high-wage manufacturing positions are hard to come by, said CBED Director Chris Erickson.

The jobs at Santa Teresa, which includes four sprawling industrial parks just north of the port of entry, generally don’t require highly skilled labor, the NMSU economics professor said. And they pay on average $23 an hour in wages and benefits.

“They’re making things like cable and copper wiring there,” Erickson said. “We’re talking basic industrial processes that are providing valuable jobs in an area where’s there’s generally low economic attainment, and where Spanish is the primary language among mostly first- and second-generation immigrants. That’s very important for communities along the border.”

All told, Santa Teresa’s industrial parks and related activities now employ about 5,850 people, including 4,960 in New Mexico, and 890 in nearby El Paso.

A swap yard at the Union Pacific Santa Teresa Intermodal Terminal in southern New Mexico.( Roberto E. Rosales/Albuquerque Journal)

More than 2,500 people work directly at businesses in the industrial parks. Another 2,250 are employed at local companies that supply goods and services to Santa Teresa, and at area businesses that depend on spending by the Santa Teresa-connected workforce.

Public and private construction projects make up the remaining jobs, employing about 1,100 people in 2020, according to the study.

Built from scratch

Those numbers are particularly impressive, considering that the area that now occupies the industrial hub was little more than open desert with no functioning businesses in the early 1990s. That’s when public officials and private developers first envisioned turning the border zone into an export-import center, said Pacheco, who has been directly involved from the start.

The Santa Teresa Port of Entry didn’t even open until 1993.

“When I saw the border for the first time in 1991, there was just barbed wire fence where the border crossing is today,” Pacheco said. “There were some ranches with cattle grazing. But other than that, it was just open desert out here, with a lot of mezquite and not much more.”

The Union Pacific Santa Teresa Intermodal Terminal.

Today, nearly 70 businesses operate in the industrial parks, a number that keeps growing annually. Those firms produce materials and components for factories in Mexico that assemble everything from computers, consumer electronics and processed foods to automobiles and industrial equipment that they then ship back to U.S.-based businesses.

“The companies here make the meat-and-potatoes stuff for factories across the border,” Pacheco said. “They do metal fabrication and plastic injection. They make electronics components, and they package everything up.”

The industrial parks also house massive warehouses for products crossing back and forth across the border, backed by a network of transportation and distribution firms that manage constant movement of goods in all directions.

Santa Teresa’s strategic location next to major east-west and north-south highways — plus a massive, $400 million intermodal rail yard transshipment center that Union Pacific opened in 2014 on the northwest side of the industrial parks — have attracted national and global companies to set up operations.

W. Silver Recycling, an El Paso-based metal recycling firm, is establishing a new processing operation at Santa Teresa in this 120,000-square-foot building, which it expects to open by year-end.(Courtesy of the International Business Accelerator)

In addition, the port of entry itself provides commercial traffic with a rapid alternative to congested border crossings in El Paso.

Northbound truck traffic reached an all-time high of nearly 141,000 crossings last year at Santa Teresa. Total imports and exports passing through the border-crossing reached $24 billion in 2020, up from $13.7 billion in 2010. As a result, Santa Teresa now ranks as the sixth biggest land port for merchandise trade among 48 existing border crossings along the U.S.-Mexico border, Pacheco said.

Export mecca

Santa Teresa’s success has helped boost New Mexico exports to unprecedented levels.

Global sales of state goods reached an all-time record of $4.68 billion in 2019, reflecting immense growth over the last decade. Indeed, until 2013, state sales to other countries never surpassed $3 billion.

Taiwanese company Cymmetric, which makes bar codes and labels, is nearing construction of its new facility at Santa Teresa.(Courtesy of the International Business Accelerator)

And New Mexico exports to its southern neighbor, in particular, have skyrocketed, converting Mexico into the state’s No. 1 trade partner over the past 10 years. Sales to Mexico hit a record $2.39 billion in 2019, climbing nearly six-fold over a decade, from just $429 million in 2010.

In 2020, trade declined somewhat after the global pandemic disrupted supply chains and slowed commerce worldwide. But this year, New Mexico’s exports are climbing rapidly again, with sales to Mexico and elsewhere trending toward a new annual record.

The export growth reflects public efforts statewide to boost trade, alongside the private sector’s expanding focus on building international markets for local goods through modern online communications and management in the global economy.

But Santa Teresa has played an outsized role in the expansion, with 58% of global exports now originating in the border zone.

Taiwanese company Admiral Cable will open its new, three-building complex at Santa Teresa next February.(Courtesy of the International Business Accelerator)

“The real growth in New Mexico exports worldwide is attributable to Santa Teresa,” said Kramer Winingham, economic research director at NMSU’s Arrowhead Center. “The trends show that this is where the growth opportunities for New Mexico exports is concentrated, especially for exports to Mexico through the Santa Teresa Port of Entry.”

That potential continues to attract new businesses to the industrial parks, boosted by growing national and global recognition of Santa Teresa’s logistical advantages.

Five more companies have announced plans to establish operations at Santa Teresa just this year. That includes two firms with operations in Chihuahua, Mexico — Rio Blue Produce and Sierra Madre Produce — both of which will build warehouse and distribution facilities at Santa Teresa to expand their markets in the U.S.

California-based Ergomotion Inc. and The Tecma Group in El Paso said in September that they will expand their international manufacturing businesses through new operations at Santa Teresa. Ergomotion is the world’s largest maker of adjustable bed bases with sales in more than 30 countries. Tecma provides bundled, or “sheltered services,” to help companies maintain low-cost and low-risk manufacturing operations.

Dallas-based Blue Road Investments’ new 315,000-square-foot spec building, which it opened over the summer, is already fully leased out after two manufacturing companies announced plans in September to set up operations there.(Courtesy of the International Business Accelerator)

Both companies will move into a new, 315,000-square-foot building that Houston-based Blue Road Investments LLC just completed this year in Santa Teresa’s Westpark Logistics Center, the newest of the four industrial parks that operate in the industrial zone. Their entrance to the park means the new “spec” facility — which Blue Road constructed before actually lining up tenants in anticipation of growing demand for space — is now completely occupied.

Also, Wisconsin-based Prent Thermoforming, which makes fitted plastic components for the medical and auto industries, plans to break ground in early 2022 on a new manufacturing facility at Santa Teresa that will create 85 jobs, Pacheco said.

Meanwhile, over the past two years, three Taiwanese companies have announced plans to build facilities at Santa Teresa. That includes composite metal parts maker Xxentria Technology Materials, bar code and label producer Cymmetrik, and Admiral Cable, which makes wires, electrical strips and computer parts.

Admiral Cable alone, which is already in advanced stages on a three-building complex at Santa Teresa, will add 340 new jobs in the industrial zone.

Room to grow

Sant Teresa’s continued expansion shows that the industrial hub is now well established as a coveted zone for trade-related businesses, foreshadowing a lot more growth going forward, said Vargas, the NMSU research fellow.

“Our study points to the opportunity for continuous growth,” Vargas said. “The industrial zone is now much more acknowledged from the investor point of view as a strategic location. It’s no longer just one plant or a couple of plants — it’s become an industrial base with room to grow and attract more investors and producers.”

The benefits are huge, not just for southern New Mexico, but for the state as a whole, CBED Director Erickson said. Apart from jobs and income, Santa Teresa-related activity now generates $90 million per year in local, state and federal taxes, including $73.3 million in New Mexico and $16.8 million in Texas.

“Santa Teresa is already providing as much economic impact in one year as the New Mexico Spaceport is projected to produce over the next decade,” Erickson said. “That puts Santa Teresa in perspective as a key focus for economic development in southern New Mexico.”

Franklin Mountain Industrial completed this new, 183,000-square-foot spec building at Santa Teresa early this year in expectation of growing demand for new space in the industrial parks.(Courtesy of the International Business Accelerator)

In addition, the study shows that Santa Teresa-related job creation is particularly stable, with no slowdown seen even during the pandemic. Indeed, direct employment in the industrial parks more than doubled over the last two years, growing from 1,140 in 2019 to 1,718 last year, and then to 2,504 as of July 2020.

“After the pandemic exploded in March 2020, 10% of all New Mexico jobs disappeared, and they’re only slowly coming back,” Winingham said. “But Santa Teresa didn’t miss a beat.”

Just as important, the study showed that more than 80% of Santa Teresa’s economic impact directly benefits New Mexico, based on research tools that allow investigators to disaggregate the impact of Santa Teresa-related activities to identify where the benefits accrue geographically, Vargas said.

Some 50% of employees connected to the industrial hub live in El Paso, but Texas receives only a small portion of the benefits.

“The real dynamic is happening on New Mexico soil,” Vargas said. “… That can help state policy makers focus more attention on Santa Teresa as a priority to fully exploit all the opportunities it offers.”

Identifying those local benefits was a key motivating factor for the study, Pacheco said.

“New Mexico’s traditional population and economic base is in the mid-Rio Grande Corridor, and communities here are often forgotten, because many up north don’t know what’s going on in the south,” Pacheco said. “New Mexico legislators have asked if we can quantify what’s happening in Santa Teresa, and now we can with a study done by one of the state’s major high education institutions.”

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