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Businesses jittery about Intel job cuts

(Russ Ball/Albuquerque Journal)

(Russ Ball/Albuquerque Journal)

Recent news that computer giant Intel is shedding up to 400 jobs from its Rio Rancho plant has left some local businesses feeling jittery as they anticipate a drop in employee spending on things like lunches and car maintenance.

A Rio Rancho councilor who represents the area surrounding the Intel plant said he’s been hearing from constituents who are nervous about the company’s intentions. Councilor Tim Crum said he’s even heard rumors about the plant closing.

“I don’t buy into that,” Crum said.

But he’s concerned, saying, “Intel is a very important component in our economy.”

Intel has soundly rejected any rumor that it might be leaving Rio Rancho.

“There is no validity to that. No truth to that. We are always pre-positioning ourselves for investment and future growth of the site,” Intel’s spokeswoman in Rio Rancho Natasha Martell Jackson said last week.

Other city and state officials say they are confident the company will remain as a linchpin of the Rio Rancho economy.

“There is no intention for them to go anywhere,” said Mayor Tom Swisstack, adding that the Rio Rancho plant is “the most productive plant in their system.”

Martell Jackson did not comment directly on Swisstack’s claim but said in an email, “Intel’s New Mexico site is a vital part of the company’s 300mm global manufacturing network and will continue to produce some of Intel’s most popular products on the market.”

Jon Barela, cabinet secretary for the state Economic Development Department, said products from the Rio Rancho plant are “crucial to Intel’s strategy and its success. Intel has invested billions of capital in New Mexico, and we look forward to Intel staying and evolving its business in the state.”

Intel warned of the staff reduction in September. About two weeks ago, the company began notifying those who would be laid off.

Crum worries about the effect the change may have on the city’s gross receipts tax revenue.

It’s unclear how soon the impact will be felt.

Martell Jackson said those affected by the “redeployment” will continue receiving salary for two months while they look for another job. She said there was no specific start date for that two-month period.

Opened in 1980

Intel opened its Rio Rancho in 1980 with around 25 employees and grew by stages. As recently as 2005, it had 5,300 workers.

In 2007, the company laid off 1,000 workers, citing increased automation and an industrywide switch to a new type of computer chips. The latest workforce reduction will take the workforce from 3,300 to around 2,900. Intel said it was part of a companywide restructuring to stay competitive in a changing market for computers and mobile devices.

Martell Jackson said the company does not disclose salary information. But, according to the latest estimates, Intel spends $300 million annually with New Mexico businesses, she said.

For local businesses that surround the Rio Rancho plant, that translates into plant employees spending their paycheck money on essentials like the sandwich for lunch, the tune-up job on the commuter car and the routine oil change.

Mike Griego, manager at the Jiffy Lube at 2400 Rio Rancho Blvd. on the southern border of the Intel complex, estimates about 15 percent of his business currently comes from folks who work at the chip-making plant. His shop offers them a 15 percent discount on services.

Across the street from the plant, Kevin Shelton, manager at the Subway at 1751 Rio Rancho Blvd., said about 40 percent of their total business comes from Intel employees.

“Our lunch time is basically Intel,” Shelton said in a recent interview.

A few doors north, Pizza 9 manager Lulu Sanchez says groups of Intel employees regularly drop in for lunch and night-shift workers stop in during the evening.

They also do a brisk trade in party packs, with orders worth $200 to $400, especially during the holiday season, she said.

Aldo’s New York Style Pizzeria, formerly Venezia’s Pizzeria, just north of Intel, also serves lunches and dinners, and caters for company meetings. Owner Aldo Venturino said business dropped noticeably after layoffs in 2007.

“We did feel a big hit in our numbers,” Venturino said. “If they frequent you for lunch and feed their family for dinner once or twice a week it’s a lot bigger toll.”

Intel has made its mark through volunteer and civic engagement, too.

Martell Jackson said a recent United Way campaign netted $2 million in employee donations. The company also sponsors seminars for the Rio Rancho Regional Chamber of Commerce.

“Intel is an enormous civic supporter of our schools and a business education sponsor,” said Chamber Chairman Clay Holderman.

In nearby Corrales, Mayor Phil Gasteyer said Intel volunteers operated a program that supplies composted material from the company cafeteria to the village, which uses it to fertilize grass on community soccer fields. The company has also donated surplus pumps and tanks to the Corrales fire department.

“They most certainly have been good corporate neighbors,” Gasteyer said.

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