A Titanic Sinking: Google Drones Fly Away
by John Weckerle
In April 2014, your editor and a number of other people received an e-mail message containing very good news: Titan Aerospace, a solar-powered drone startup operating at the Moriarty Municipal Airport – had been purchased by Google, and the project was to stay in Moriarty. As reported in the Mountain View Telegraph less than sixteen months later, Google abruptly announced its decision to abandon Moriarty and move the operation to California, reportedly so that it could better facilitate coordination with its other aviation-related operations. Google leaves behind a $15 million, 60,000 square-foot facility at the airport, and will be repaying a $1 million dollar grant for water and sewer upgrades.
State and local officials, while expressing disappointment, have variously downplayed the negative and emphasized the positive, seeking to find a silver lining in this particular cloud. Governor Martinez was reported to have called the move disappointing and expressed support for the community (KOAT), while U.S. Representative Michelle Lujan Grisham was somewhat more pointed in her expression of disappointment (Albuquerque Business First). New Mexico Economic Development Secretary Jon Barela emphasized that the State would recover its million-dollar infrastructure investment, and noted that the situation leaves Moriarty with assets that “will be able to benefit from water and sewage lines built with the state grant. Barela said the structural improvements ‘can help attract future projects to the state.'” (Santa Fe New Mexican). Moriarty Mayor Ted Hart, quoted in several of the previously referenced articles, characterizes the economic impacts as minimal (and in a direct and immediate way, at least, he may be right) and cited some apparent, though vague, commitment by Google to work with the City to find a use for the facility.
Reactions, at least in the form of responses to news stories, have been varied. Some cite problems with in-state higher education, others point to workforce issues, others mentioned inexperience in aviation and excessive optimism on Google’s part, and still others blame Governor Susanna Martinez (while our positions often do not align with Ms. Martinez’s, we acknowledge that blaming her directly for this one is similar to blaming her for a meteorite strike or the weather. More likely suspects would include the Easter bunny, Godzilla, or extraterrestrials. Or maybe the East Mountain Tea Party.).
It’s clear that much of the general reaction was surprise. Our reaction was two fold: surprise (we were surprised by all the surprise, because we were surprised by Google’s initial decision to operate here in the first place) and something more typical…
A drive to look at some data. We admit it; we’re nerds. Acknowledging that Google’s decision election to move was clearly business-based, we wondered what local factors might have influenced the decision and started to pull some economic data together. As we worked through the data, we recognized that one of our regional economies is clearly in distress.
That’s right; we said one of them. There are, at the very least, two.
A Tale of Two Economies
Moriarty is considered part of an economic development region, of sorts. The region, served by the Estancia Valley Economic Development Association (EVEDA), more or less includes Edgewood, the very southern portion of Santa Fe County, Moriarty, and at least a portion of the northern part of Torrance County. Other towns involved may at times include Estancia, Willard, and possibly Encino. The boundaries of the region are perhaps a bit vague; with respect to the data, we examined all of Torrance County. With varying degrees of cooperation, municipal, County, and State governments coordinate with the regional economic development association with the stated intent of – well, developing the economy: creating jobs and increasing business are the common themes. And here lies what may be an important point: the actions needed to develop an economy are specific to the economic conditions that exist in that economy.
As it turns out, we have two very different economies within our supposed “regional economy,” and for the purposes of discussion these can be approximated as 1) Edgewood, and 2) Moriarty and Torrance County (acknowledging that Moriarty is, in fact, in Torrance County).
Through much of its history, Moriarty was the economic and political hub of the area in a way – and for much of its history, Edgewood was anything but. In the last couple of decades, however, Edgewood’s closer proximity to Albuquerque, and its accessibility to regional residents, have made it both attractive as a location for retail and services business and a commuter community. Having recently celebrated its fifteenth year as an incorporated entity, Edgewood has assumed an economically dominant position in the region. 2013 data shows that, with a median income of $56,080 and a poverty rate at just 8.0% , Edgewood stands in stark contrast to its neighbors, just a paper-thin line on a map away: Moriarty, with a median household income of $30,139, and a poverty rate of 27.7%, and Torrance County as a whole with a median household income and poverty rate, respectively, at $30,802 and 28.6%.
Edgewood’s economic progression has been essentially along a retail and services model, heavily supported by its area’s commuter population. The benefits have been substantial; in the period between 2003 and 2013 (the latest data available on the U.S. Census Be Censtat database), Edgewood – while only adding a net of five businesses – gained 308 jobs and more than doubled its annual payroll from roughly $13.8 million to $27.7 million. By contrast, during the same period, Moriarty – which has typically pursued industrial, manufacturing, technology, energy, and aviation-related businesses in addition to a race track – lost 292 jobs and its payroll, which increased from about $22 million to $23.7 million, did not even keep up with inflation. The city added three businesses during this period, and net gain in manufacturing businesses was zero. Estancia fared somewhat better, gaining six businesses (with gains in Accommodation and Food Services but a loss of one of three manufacturing business), increasing payroll from about $9 million to $14.7 million, and an increase of 102 jobs – although the bureau flags the jobs data as having potentially substantial noise.
Torrance County as a whole faces some challenges. From 2010 to 2014, the County’s population dropped 4.7 percent, persons under 18 years decreased by 1.3 percent, and persons over 65 increased by 3 percent. While 80.7 percent of the County’s residents are high school graduates, only 14.7 percent hold bachelor’s or higher degrees. By comparison, the percentage of people with bachelor’s and higher degrees are noticeably higher in neighboring Santa Fe County (39.7 percent), Bernalillo County (32.1 percent) and Albuquerque (33 percent) – representing a challenge for Torrance County with respect to attracting technology-based and manufacturing enterprises. Estancia Valley business owners often complain about workforce challenges, and at least some positions are being filled with commuters from Albuquerque and beyond; an employee at an Edgewood grocery store mentioned some time ago that he lived in Rio Rancho, a local hair stylist recently identified as an Albuquerque commuter, and we’re sure there are others.
Fairly or not, Edgewood political and business officials privately (and sometimes not so privately) grumble that the regional economic development association is disproportionately focused on Moriarty and Torrance County (looking to its own interests, the Town of Edgewood is now contracting to the Edgewood Chamber of Commerce for economic development services in addition to its membership in EVEDA). If this were the case – and we make no conclusions here and now on that issue – such a bias might be understandable. The association was founded in Moriarty; it maintains its offices there; the majority of its executive officers have traditionally been residents, businesspeople, and past or present officials from Moriarty and Torrance County; and the senior positions on the board have typically been dominated by that sector. For these people, the needs of Moriarty and Torrance County are very close to home – and as the numbers show, they are very urgent.
However, the numbers also suggest that past approaches have not worked and are not working. There have been some success stories, and the County has been doing some of the right things in pursuing renewable energy and agricultural gains, but the economy of Moriarty and Torrance County appears to be declining rather than developing. While Edgewood is growing both in terms of population and economy, Moriarty and Torrance County are shrinking and appear to be losing ground in most if not all non-agricultural sectors. Perhaps it is time for Edgewood to take a greater leadership role in regional economic policy – although in a way perhaps it already has, by growing its economy and creating jobs for its neighbors.
Are Moriarty and Torrance County doomed? We hope not; there are very good people doing valuable and important things there. And as the regional economy shifts, perhaps more and more of them will be bringing home paychecks from Edgewood. But populations (and businesses) are shifting from rural to urban areas nationwide, and the manufacturing sector in the United States continues to face challenges – and any economic strategy that does not assess and deal with those issues is unlikely to succeed.
Why did Google leave? We’ll likely never know the whole story, but it’s clear they thought it was time to put the operation in what they considered to be the right place. In Ripples From the Zambezi, economic development expert Dr. Ernesto Sirolli, founder of the Sirolli Institute, recounts a disastrous attempt to graft a business onto the wrong population under the wrong conditions, and then provides many examples of successful development efforts that came from inside communities (rather than bringing businesses from without) and built on what was already there. (We recommend watching Dr. Sirolli’s TED Talk on the institute’s web site) The economic development community should take a long, hard look at the assets that are already in place – including and especially agriculture, which has not received sufficient attention – and leverage the strengths it has. With the right strategy and cooperation with neighbors, economic growth may return to Moriarty and Torrance County, to the benefit of its residents and the region as a whole.