New Mexico exports on track to set record in 2021 - Albuquerque Journal

New Mexico exports on track to set record in 2021

Copyright © 2021 Albuquerque Journal

New Mexico exports are barreling toward an annual record this year, marking a sharp turnaround from last year’s pandemic-induced slowdown.

Total state sales worldwide climbed 55% in the first nine months of 2021, from $2.77 billion in the January-September period last year to $4.28 billion this year, according to the U.S. Commerce Department. If those trends continue, the state could well surpass its previous annual export record, reached in 2019, when global sales hit $4.68 billion.

In fact, at $4.28 billion as of September, the value of state exports is already more than $1 billion higher than the January-September period in 2019, when sales abroad totaled $3.16 billion.

“It’s looking really good,” said Jerry Pacheco, trade consultant and executive director of the International Business Accelerator at Santa Teresa in southern New Mexico.

“I expect this to be our biggest year yet,” Pacheco told the Journal. “New Mexico exports are already well exceeding 2019, which was our flagship year before the pandemic.”

The coronavirus pandemic markedly slashed exports nationwide in 2020 as consumers hunkered down at home, businesses temporarily shut down across the globe, and supply-chain disruptions slowed commerce worldwide.

Total U.S. exports fell to $1.4 trillion last year — the lowest level since 2010, according to the U.S. Census Bureau, based on data from the Commerce Department.

In New Mexico, the global downturn cut state exports by 21% across the board. Sales to Mexico — the state’s No. 1 export market — fell by 8% last year. And sales to China, New Mexico’s second-largest trade partner, plummeted by 40%.

But this year, the trends have reversed. Sales to Mexico grew 17% from January-September, putting New Mexico’s southbound exports on track for an annual record. And sales to China ballooned nearly threefold, from $435 million in the first nine months of 2020 to $1.2 billion this year.

The Intel factor

New Mexico has worked to expand its exports to Asia in recent years, with state and federal assistance programs helping local companies to diversify their markets in that region.

But while sales there of everything from high-tech products to consumer goods have increased, the boom in trade with China likely reflects the ebb and flow of shipments from Intel Corp. in Rio Rancho to its sister facilities overseas, Pacheco said.

A cargo truck enters Mexico through the Santa Teresa Port of Entry earlier this month. Exports from New Mexico are on their way to set an annaul record this year.(Roberto E. Rosales/Journal)

Historically, Intel has dominated New Mexico’s exports with shipments of computer-related components and electronics, accounting for up to 80% of sales abroad in years past. And with the Rio Rancho plant now back on a growth cycle with new product development and production happening there, the dramatic, rapid upswing in exports to China points once again to the Intel factor, Pacheco said.

“I believe a lot of what we’re seeing in China now is directly tied to Intel,” he said.

Until recently, Intel’s dominance generally led to erratic ups and downs in New Mexico’s export performance as Intel shipments abroad rose and fell from one year to the next. But the state’s export structure has fundamentally changed over the past 10 to 15 years, significantly reducing Intel’s influence on annual export totals.

That’s largely due to the massive build-out of trade-related industrial parks at Santa Teresa in southern New Mexico, where about 70 companies now operate a stone’s throw from the Santa Teresa Port of Entry.

The boom in activity there is the central factor driving the rapid growth in New Mexico’s exports overall in recent years, and in particular, sales to Mexico, according to state officials.

“Nearly all of New Mexico’s export growth can be attributed to the cross-border industrial hub around Santa Teresa,” Economic Development Department Secretary Alicia J. Keyes said in an email to the Journal.

As a result, while Intel’s ups and downs still noticeably affect New Mexico’s export totals, they no longer disrupt the state’s overall annual export performance, Pacheco said.

“We’ve neutralized that dependence now with the industrial base built out at the border,” he said. “Now, if Intel exports go down, exports at the border and overall remain robust.”

‘Strategic plan’

State officials now see significant opportunities to build on Santa Teresa’s success, not just to expand the export base in southern New Mexico, but to advance trade-related business along the mid-Rio Grande Corridor and beyond.

The state’s new “strategic plan” — a 20-year road map for economic development that Gov. Michelle Lujan Grisham’s administration released last month — includes a section on the significance of global trade for New Mexico’s economy and strategies to expand it.

Manufacturing exports alone support about 15,000 jobs around New Mexico, according to the report. Apart from Santa Teresa, that includes numerous businesses scattered throughout the state, the vast majority of them small- and medium-sized companies that export a range of goods, particularly high-tech products such as industrial machinery, electric machinery and precision instruments.

But until recently, New Mexico hadn’t proactively promoted its businesses and industry in international markets, according to the report.

The new plan calls for aggressive promotional efforts to expand and diversify trade relations with more countries, both to build new markets for New Mexico’s goods, and to attract more foreign investment to the state.

It also advocates more emphasis on building up the industrial hub at Santa Teresa, along with efforts to spread the border hub’s benefits to more parts of the state by directly linking business activity elsewhere with operations at Santa Teresa.

“There is an opportunity for Albuquerque companies to perform value-added processing or handling of goods as they are shipped from the Santa Teresa Port of Entry to other regions of the U.S.,” the report says. “Going forward, the state should determine how to better leverage Santa Teresa’s position in cross-border trade to benefit other areas of New Mexico.”

In particular, the plans calls for more official trade missions to other countries to expand high-value markets for New Mexico goods, and to recruit foreign businesses to the state.

The Economic Development Department has already made some progress in that regard in Taiwan through a state trade mission there in 2019, and the recent opening of a liaison office in the capital of Taipei.

The EDD also signed a new agreement in October with the Taiwanese Ministry of Economic Affairs to develop closer trade relations, foreshadowing a lot more interaction between public and private sector representatives from both sides.

Those efforts have already encouraged three Taiwanese companies to establish new manufacturing operations at Santa Teresa. And more promotional efforts are in the works.

“We know this requires a coordinated effort — and that’s a key finding in the strategic plan,” Secretary Keyes told the Journal. “We want to strategically plan more trade missions to tell our story and aggressively pitch the state’s border zone to foreign companies looking to diversify their supply chains by using the logistical advantage of Santa Teresa for their manufacturing.”

New Mexico exports

 

Editor’s note: A graphic in an earlier version of this story contained an incorrect dollar amount of exports to from New Mexico to Europe between January and September in 2021. The correct amount is $271 million, not $271 billion. The graphic has been updated.

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