Experts: Milk industry financial troubles causing unemployment jump

By Sharna Johnson: Freedom New Mexico

Local officials say financial ripples in the milk industry are the major reason unemployment has jumped across Curry and Roosevelt counties.

Those same officials believe it will be short lived as the industry emerges from its economic difficulty.

The latest data released Thursday shows in February, unemployment in Roosevelt County was up 2.5 percent over the same period last year to 6.2 percent.

In Curry County, the rate increased by 1.7 percent, coming in at 5.7 percent.

Although high for eastern New Mexico, the numbers remain below the state’s rate of 8.7 percent.

Economic development directors in neighboring communities say it is a combination of direct hits in the struggling dairy industry coupled with a sour national economy.

Milk prices are at historic lows, according to Chase Gentry, executive director of the Clovis Industrial Development Corp.

He said the impact of dairy on the communities through direct employment, support services and even retail and the local service industry, cannot be underestimated.

“When the dairies are down, they’re not spending their money,” Gentry said.

In late 2009 in Portales, Western Dairy Transport LLC laid off about 75 workers after its milk-hauling contract with Dairy Farmers of America expired, impacting the Roosevelt County unemployment landscape, said Greg Fisher, Roosevelt County Community Development Corp. Executive Director.

In February WDT announced it was consolidating its Clovis and Portales operations and Greatwide Logistics Inc. entered into the transport scene, with both companies bringing new jobs to the community.

“The whole unemployment (dynamic) in this region points to the fact that dairy and transportation play an important role in this region,” Fisher said.

The move is expected to not only replace the lost jobs but add 100 more.

“The worldwide crashing of the milk price in 2008 caused a ripple effect in Roosevelt County. We lost not only direct jobs for the dairy industry but also experienced a spin-off effect,” Fisher said.

“We’re starting to see an increase in transportation again. We’ve already seen a net increase of about 50 jobs. So with any luck, we’ll be back down to five percent (unemployment) in 2010.”

Fisher said the spread between production costs and milk prices is narrowing and improving; in turn improving numbers.

Sam Yates, terminal manager for Indian River Transport in Clovis said his company directly supports dairies and has stayed busy through the slump.

“We’ve been really busy. We’ve been steady,” he said. “We try to dedicate ourselves to the dairies.”

Another factor contributing to higher unemployment Fisher and Gentry point to is tightened lending.

Many companies are unable to expand and development is slowed because banks have cut back on lending — which means growth, new jobs and construction jobs taper too.

However data shows Curry and Roosevelt counties remain among the lowest economically stressed counties in the nation, Fisher said.

Gentry said current unemployment numbers are actually more in line with those of past years, with the last four to five years being uncharacteristically low.

And Gentry pointed out some unemployment actually bolsters the job market.

Economists estimate there will always be about two percent unemployment due to people who can’t or won’t work, so when the numbers get to that level, employers start struggling to fill vacant positions.

So, “in a lot of ways a higher unemployment rate is actually an advantage, even thought you don’t want people to be out of work, on a recruitment level it’s a positive,” Gentry said.