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Service providers look beyond NM’s borders

ALBUQUERQUE, N.M. — Chavez-Grieves Consulting Engineers Inc. has provided structural engineering services for some of New Mexico’s most prominent structures, including renovations of the Pit and Isotopes Park. But, increasingly, the company is looking outside state lines for work.

“We’re very committed to our in-state clients,” said Chris Youngblood, Chavez-Grieves’ Albuquerque-based CEO. “But I can’t imagine where our firm would be right now if we were completely dependent on New Mexico’s economy.”

Youngblood said that, in his line of business, the state’s economic climate tends to lag behind the rest of the nation’s by about 18 months. While New Mexico’s slow recovery has dramatically decreased the number of public sector construction projects – traditionally the bread and butter of Chavez-Grieves’ work – states like California, Washington and Arizona aren’t having the same problem.

Chris Youngblood, CEO of Chavez-Grieves Consulting Engineers, stands in front of a picture of a medical facility in Arizona for which the company provided engineering services. Chavez-Grieves is one of many New Mexico service providers increasingly doing business out of state. (Adolphe Pierre-Louis/Albuquerque Journal)

Chris Youngblood, CEO of Chavez-Grieves Consulting Engineers, stands in front of a picture of a medical facility in Arizona for which the company provided engineering services. Chavez-Grieves is one of many New Mexico service providers increasingly doing business out of state. (Adolphe Pierre-Louis/Albuquerque Journal)

Youngblood said whereas, 10 years ago, out-of-state clients made up 40 percent to 50 percent of the company’s business, it’s now about 60 percent and 65 percent. And much of that is by design.

“When things are the worst, a lot of firms go into a bunker mentality, but that’s when you need to spend the most on marketing and traveling,” he said. “We increased our marketing budget during the recession and it really paid off. Now, our group of partners who are team leaders spend quite a bit of time traveling to clients and potential clients.”

Chavez-Grieves is far from alone in this regard. New Mexico’s lackluster economy is encouraging more and more service providers to identify out-of-state markets for their offerings. Doing so often has significant benefits for the businesses that choose to diversify their clientele. And counterintuitively, it could be exactly what the New Mexico economy needs.

Reviving the economy

In recent years, much of the discussion around economic development in New Mexico has centered around one catch phrase: economic base jobs. These positions are ones in which goods or services are exported out of state, thereby bringing new wealth into New Mexico instead of circulating existing money.

Mark Lautman, lead consultant for the New Mexico Legislative Jobs Council, said economic base jobs are a crucial component to lifting the state out of its economic doldrums.

“There’s a multiplier effect,” said Lautman. “Every 15 economic base jobs we have are estimated to create another 35 service sector jobs.”

The council estimates that the state needs to create 140,000 economic base jobs over a decade to close the current unemployment gap and address the needs of population growth over that time period. That formula has to include service providers, said Lautman, particularly those who are working on their own.

“One of the biggest changes we’ve seen recently is in the ‘solo work’ category, people who are contractors or consultants,” said Lautman. “People think about manufacturers when they think about exporting, but it’s these solo workers who are driving an important piece of the economic growth right now.”

Craig Anderson, a Santa Fe-based artist and curator, works on his own as an arts consultant in one of the most prominent artistic communities in the country. Yet two of his three major advising clients are from outside the state, which Anderson said is a change from recent years. In one case, he is developing a digital catalogue for a Maryland-based foundation; in the other, he is advising a photographer in California about how to present his work to the marketplace.

“Do I think it has something to do with the local economy? Yes I do,” said Anderson. “I’m a business person in addition to being an artist, but I’m really concerned about the well-being of the people here.”

REDW has found that having client diversity across geography and service offerings is good for business. (Dean Hanson/Albuquerque Journal)

REDW has found that having client diversity across geography and service offerings is good for business. (Dean Hanson/Albuquerque Journal)

The benefits of diversification

At the Albuquerque-headquartered REDW LLC, an accounting and business consulting firm, out-of-state work has increasingly become part of the business model as the company has realized the benefits of diversifying its clientele, as well as diversifying the services it offers those clients.

“At first, the economy forced us to explore other service lines, because that’s what our out-of-state clients wanted: HR consulting, IT, security, that type of thing,” said Ron Rivera, a former managing principal at REDW. “Those were services we could then offer other clients, out-of-state or otherwise. Tough times are an opportunity for businesses to take a look at themselves and improve themselves.”

At accounting and business consulting firm REDW, out-of-state work is a crucial part of the business model. From left to right, managing principal Steve Cogan, principal Lisa Wilcox and former managing principal Ron Rivera. (Dean Hanson/Albuquerque Journal)

At accounting and business consulting firm REDW, out-of-state work is a crucial part of the business model. From left to right, managing principal Steve Cogan, principal Lisa Wilcox and former managing principal Ron Rivera. (Dean Hanson/Albuquerque Journal)

That diversity across geography and service offerings means a company is less likely to feel an economic downturn, said REDW principal Lisa Wilcox, because the company isn’t dependent on one service or local economy to carry the bottom line. And Steve Cogan, REDW’s current managing principal, said out-of-state clients are often eager to work with the company, not only because of its reputation and the variety of services the company offers, but also because New Mexico’s low cost of living means REDW can offer clients services at a price lower than their competitors based in other states.

Bob Feinberg, a commercial real estate broker with Colliers International, says allowing state lines to limit one's business equates to "a lack of vision." (Adolphe Pierre-Louis/Albuquerque Journal)

Bob Feinberg, a commercial real estate broker with Colliers International, says allowing state lines to limit one’s business equates to “a lack of vision.” (Adolphe Pierre-Louis/Albuquerque Journal)

Bob Feinberg, an Albuquerque-based commercial real estate broker with Colliers International, who said he is also increasingly pursuing and engaging in out-of-state business, said working outside New Mexico is essential in his industry to finding the best deals. He said he recently conducted an out-of-state transaction without even setting foot outside New Mexico.

“I saw an aerial view of a property in Texas, made four phone calls and got three tenants,” said Feinberg. “If a broker allows state lines to impede their business, it’s because of a lack of vision.”

Going global

For some service providers, the next step after embracing out-of-state clients is often an international one. Youngblood is planning a trip to Norway in the coming weeks to visit a former client and discuss a potential project.

“We’ll go to whatever extreme we need to if it means bringing jobs back to New Mexico,” said Youngblood.

Feinberg is exploring a possible venture in Algeria. If a company is open to doing out-of-state work, Feinberg said, they would be foolish not to consider looking outside the country.

“What makes Algerian shoppers any different than American shoppers?” said Feinberg. “They need a place to get their groceries, a place to get their hair cut. It’s a great big world out there, and that’s a good thing.”

When asked what advice he has for New Mexico businesses with only in-state clients, Feinberg relays a family story. According to Feinberg, his father was kicked out of high school three weeks before graduation and came to Feinberg’s grandfather asking for guidance. The man handed his son a geography book, pointed to a map and told him to conquer the globe in spite of his recent setback.

“Limiting yourself to Albuquerque or New Mexico limits everything else,” said Feinberg. “Go out and conquer the world.”

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