New Mexico ranked 37 out of 50 states in terms of gross domestic product (GDP) in 2018. As of January 2020, the state's unemployment rate was 5%, compared to the U.S. unemployment rate of 3.6%. The projected annual job growth rate is 0.8%. New Mexico is certainly not one of the most prosperous states in the nation, however, the New Mexico Economic Development Department, a statutorily created public-private organization that markets the state to entrepreneurs, points to seven industries where it believes New Mexico will make its mark.
7 Industries Set to Boost New Mexico's Economy
New Mexico has a competitive advantage when it comes to energy, landscape, sheer space, geographic location, logistics, research and development (R&D), and manufacturing. These factors are encouraging businesses to relocate to New Mexico, and activity is increasing in the following key areas as a result.
From the latest data provided by the U.S. Energy Information Administration (EIA), from 2017, New Mexico is the ninth largest state in terms of energy production. Energy sources include oil and gas, solar, wind, geothermal, and biofuel. The state's average of 293 days a year of sunshine and its vast open spaces make it an ideal setting for solar and wind energy projects. In 2017, New Mexico added wind power capacity at a faster rate than any other state. However, as of 2019, it is still not in the top 10 producers of wind energy in the nation.
Companies in the oil and gas sector provided $3.1 billion in tax revenue for New Mexico in 2019, an increase of 41% from the year prior. As of 2020, New Mexico ranks third nationally in oil production.
The San Juan Basin, located in the northwestern part of the state, is the single-largest proven natural gas reserve in the United States. New Mexico's southeast corner shares the Permian Basin region with Texas. The Permian Basin is one of the most important areas for the production of light sweet West Texas Intermediate (WTI) crude oil in the country. Geologists estimate that the Permian Basin may have reserves for another 100 years.
New Mexico also has other abundant natural resources, for example, the state is first in U.S. potash production and third in U.S. copper production.
2. Aerospace and Defense
The state has an ideal climate for aerospace and defense projects together with testing facilities and restricted airspace. Spaceport America, an FAA-licensed spaceport located on 18,000 acres of State Trust Land, is a hub for industry players such as Virgin Galactic and UP Aerospace.
New Mexico is home to three U.S. Air Force bases: Kirtland, Cannon, and Holloman. In addition, there is Fort Bliss, a U.S. Army proving ground, and the White Sands Missile Range, a missile test range that has served as the primary testing ground for U.S. missiles since the end of World War II. There are also large U.S. government research and development facilities that provide approximately one out of 10 jobs in New Mexico. These include Sandia National Laboratories and the Los Alamos National Laboratory, two of three facilities in the United States where classified nuclear weapons design work is conducted.
3. Tourism and Food
New Mexico's culture is a popular draw for tourists, particularly its spicy, unique foods and products created from a growing food-processing industry. The state has competitive prices for electricity, land, and wages, which encourages food and tourism companies, and differentiates New Mexico from other, more costly, states for doing business.
The state Department of Tourism reported growth in tourism spending for the past seven years. According to the report, travelers spent $7.1 billion in 2018, which was an increase of over 7% from the previous year, and generated $694 million in state and local taxes.
4. Distribution, Logistics, and Transportation
New Mexico's geographic location, climate, and transportation infrastructure are all factors that appeal to businesses. The North American Borderplex near the Chihuahua, Texas, and New Mexico borders is an area of rapid growth with a vast comprehensive logistics and transportation network. Large manufacturers and some of North America’s largest military assets rely on labor and access to markets using the area's transportation infrastructure. The area has a binational, bilingual culture with over 2.4 million individuals and one of the world’s largest bilingual workforces.
5. Advanced Manufacturing
New Mexico ranks first in the west for the lowest effective tax rate for manufacturers. The state provides what they call a "Job Package", created for workers and businesses, that reduces the corporate income tax to 5.9%. The state has organized a talented workforce, low cost of living, and other benefits to make it attractive for manufacturing companies to set up shop in New Mexico. Included in this is the creation of business parks for manufacturers, such as the Sandia Science and Tech Park. The state's universities have also expanded their offerings of manufacturing programs to be able to provide a skilled workforce suited to the manufacturing sector.
6. Digital Media and Film Production
New Mexico offers production companies a progressive tax credit incentive for computer-generated imagery services provided in New Mexico for film and multimedia projects. New Mexico has been a favored movie location shooting site since the earliest days of motion pictures, especially for westerns. According to the New Mexico Film Office, from 2015 to 2019, the amount of direct in-state spending into the New Mexico economy increased from $289 million to $526 million.
New Mexico's extensive research and development facilities have expanded the state's involvement in the film industry to include animation and graphics, other digital media production and post-production services. Among the many noteworthy movies filmed on location in New Mexico are The Grapes of Wrath, Superman, True Grit, Easy Rider, and Silverado.
7. Administrative and Federal Government
Many U.S. companies are locating their customer service centers in New Mexico, including The Gap, Hewlett-Packard, Fidelity Investments, Lowe’s, and Alliance Data Systems occupations, and have a need for administrative roles. In 2019, New Mexico's job growth rate of 2.4% exceeded that of the nation's of 1.4%
The Federal government plays a major role in the economy of New Mexico and provides many of the state's largest employers, including Sandia National Laboratories, located in the Rio Grande Research Corridor. The Albuquerque research corridor is home to major U.S. government research facilities and a number of high-tech private industries, such as Lockheed Martin Engineering and Science Company. Other major federal employers include the U.S. Bureau of Land Management, the National Park Service, and the U.S. Citizenship and Immigration Service. As of February 2020, 22% of New Mexico’s workers are employed in government jobs.
The Bottom Line
Though New Mexico's economy isn't one of the largest in the United States, it certainly holds top spots in a lot of industries with plenty of growth opportunities and support from the federal government.