New Mexico's Misleading Export Numbers

October 18, 2017

 A couple of times every year, New Mexico officials, including Gov. Susana Martinez, as well as a couple of newspapers in town, gush profusely about how the state's exports have hit record levels or surging to new record levels.

 

The headlines from the papers shout things like the state's export growth was tops in the nation or that exports are surging after a recent lull.

 

 

The implication is that the more than $3 billion in stuff that we export every year to other nations is made here, which would mean that a lot of people are employed in manufacturing, food processing or other decent-paying jobs in the export sector.

 

There's a problem, though, with those cheerleading headlines and pronouncements. They're misleading and inaccurate.

 

The truth is that more than half of the things – 52.2 percent – that are categorized as New Mexico exports so far this year aren't that at all. They're actually “re-exports,” and are goods that are shipped here from other states and then trucked across the border to Mexico to be put into cars, refrigerators or other finished products.

 

As of the end of August, New Mexico had $1.6 billion in exports, according to the U.S. Census Bureau. Of that, $837.2 million, or 52.21 percent, were re-exports, or things made in other states or other countries.

 

Read the Census Bureau's report here.

 

Ed Herrera, director of the Office of International Trade in the New Mexico Economic Development Department, confirmed that re-exports are goods that aren't made here. They're shipped here and then basically shipped across the border to Mexico at Santa Teresa, he said.

 

“I would go so far as to say that of the 52 percent [of New Mexico's exports that are re-exports] they do not originate in New Mexico,” Herrera told ABQReport. “Those are goods that are shipped through Santa Teresa even though they did not originate in New Mexico.”

 

Herrera gave an example of what counts as a re-export: car parts made in Indiana that are shipped to Santa Teresa and then taken across the border to be put into cars being assembled in Mexico.

 

Economic development expert Mark Lautman called the gush about exports by the media and sate officials “fake news.”

 

“They are inferring that it's [total New Mexico exports] that it's all stuff we produce,” Lautman said. “It's better than nothing, but it's nothing to crow about.”

 

Lautman added that it's “disingenuous” for state officials and news outlets to infer that lots of good-paying, goods-producing jobs are being created in the state because of the overall export numbers. Re-exports, which again, constitute more than half of the state's total exports, create warehousing and driving jobs, but they don't compare in pay to real manufacturing jobs, Lautman said.

 

“Somebody else made it somewhere else and we're just retrading it,” Lautman said. “It has some value, but none of our residents made it, so very few jobs associated with re-exports can be [considered true export jobs].”

 

Exports are important because they are pretty much the only way a community or state can grow their economies and create wealth. Goods or services that are sold to people in other countries, or other states, bring new money into an area and grow the total economic pie.

 

Service sector jobs only slice a community's economic pie into smaller smaller pieces. That means that in order to get more money, a business has to raise prices or hope that another firm in the same line of work fails.

 

Some news outlets and their reporters would have you think that the state's exports have been growing wildly in the past decade, but that's because they have failed to count re-exports, which have been growing in the past decade.

 

In 2007, re-exports accounted for 12.7 percent of New Mexico's total exports. In 2012, they were still a small 13.25 percent of the state's total exports. But then Santa Teresa got going, and in 2014, re-exports jumped to 41 percent of all exports.

 

That's around the time a couple of papers in town started cheerleading about the alleged increase in exports. Too bad they didn't go deeper into the subject.

 

Here are some other facts about New Mexico's exports that the cheerleaders don't tell you. In 2016, New Mexico's $3.6 billion in exports – about half of which were re-exports – represented 0.3 percent of all U.S. exports. That's beyond minuscule.

 

And, last year, exports from Intel – a single company – accounted for 52 percent of all the state's real exports. It means that New Mexico's wealth creation is dependent on a single company, a company that has dramatically downsized its Rio Rancho plant in recent years.

 

Maybe someday the daily newspaper in town will stop its shameless boosterism and give you the truth about New Mexico's exports.

 

And maybe it will someday tell you that even when counting re-exports, our total exports represent 0.3 percent of all U.S. exports.

 

But don't count on it.

 

 

 

 

 

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