REMARKS AS PREPARED FOR DELIVERY - SANDY K. BARUAH, ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - CENTRAL NEW MEXICO BUSINESS ROUNDTABLE - ALBUQUERQUE, NEW MEXICO

FRIDAY, JULY 7, 2006

AS PREPARED FOR DELIVERY

Introduction by Dr. John Walstrum, Executive Vice President for Academic Affairs, Central New Mexico Community College

Thank you, Dr. Walstrum, for that very kind introduction, and for hosting us here today in this great facility at Central New Mexico Community College. And, on behalf of President Bush and Commerce Secretary Carlos Gutierrez, I would like to thank you all for being here this afternoon.

While many people contribute to events like this today, there are always a few “stars” who deserve special recognition. I’d like to thank Brad Moore and Bob Hall of the CNM Workforce Training Center for their support in making today’s meeting possible, and let me also recognize my colleagues from the Commerce Department –Matthew Hilgendorf of our Santa Fe U.S. Commercial Service and Matt Crow, our Director of Public Affairs. Thank you all for your hard work.

I always enjoy my visits to the great State of New Mexico, and I’m pleased to be back today to celebrate and recognize an American company’s success in competing in a world-wide economy. Albuquerque is an ideal location for such a discussion, because good things are happening here when it comes to building innovative companies that thrive in a global marketplace.

During my visit this past January, Albuquerque was celebrating the success of Advent Solar – an advanced solar technology firm in the region – and their announcement of plans to open a 1,000-employee facility at Mesa del Sol. Today, we recognize another leading Albuquerque innovator, Lectrosonics, on its success in capitalizing on international market opportunities for its advanced audio technology products.

What’s more, Forbes magazine – in its May 2006 issue – declared Albuquerque to be “Ready for Takeoff,” listing Albuquerque as the nation’s best Metro area to do business, and highlighting recent announcements by Tempur-Pedic and Merillat Industries to build new factories in the area.

So, Albuquerque has good reason to be very optimistic about its position as a global competitor. And, “hot off the press” from Washington this morning is news that the same continues to be true for America as a whole.

This morning my colleagues back in Washington announced that 121,000 jobs were created in June, and that the unemployment level is at a low 4.6 %, what many economists consider full employment and below the level before the 9-11 attack in 2001. The economy has created more than 1.85 million jobs in the last year, and 5.4 million since August 2003. Since 2004, the U.S. has created about twice the number of jobs as the rest of the G-7 countries combined.

Our growth rate – measured by GDP– rose 5.6% in the first quarter of 2006, following an impressive 3.5% for 2005, which is almost twice that of any E.U. nation. We’ve grown for 18 straight quarters, our GDP per capita is the highest among all major nations, and private sector forecasters expect solid growth to continue in 2006 and 2007.

Real, after tax incomes, have increased about 13% since January 2001 and, despite returning $880 billion to American taxpayers as part of President Bush’s tax cuts, the Treasury Department recently reported that tax revenues are up 11% in 2006 and are at the highest level in history.

More Americans own their homes than ever before – about 70% – which is not only a record here in America, but far outpaces our economic competitors…and homeownership is a critical economic driver.

So, while the national media sometimes makes it difficult to see, the landscape is filled with positive news about the economy.

All this is tremendous news, not just because the national economic picture is strong, but it means that communities like Albuquerque can tap in to this strong, growing national economy. Imagine how much more difficult economic development would be for communities like Albuquerque – and how much more difficult it would be for companies like Lectrosonics to grow – if there was not this strong economic growth across the nation.

Maintaining Albuquerque’s progress – and America’s leadership – in the world-wide marketplace will take effort, and this afternoon I’d like to outline for you 5 “new realities” of the 21st Century economy for your consideration as you work to ensure your region’s continued prosperity.

Let’s start with New Reality #1: While perhaps the most obvious, it is the most important, which is that we are truly in a Global Economy, or as New York Times columnist Tom Friedman says, the world is…flat.

In the new flat, global economy, competition is not just from the firm down the road, our competition comes from any person in any corner of the globe with a good education, a good idea, and a good Internet connection.

Here is your globalization pop quiz: Which of following products is more “American”: a new Ford Mustang or a new Toyota Siena mini-van? … Well it depends. Of course, Ford is an American company. Toyota is not. Both products are built in America by American workers, but the Toyota mini-van contains 90% American-sourced parts, and the quintessential American Ford Mustang has about 65% American-sourced parts. Even the American muscle car has gone global.

While competition in the 21st Century is intensifying, so are the opportunities for valuable business partnerships. Our partners too can now be anywhere on the globe. For example, the Renault-Nissan Alliance – which has global sales of nearly 6 million vehicles a year representing more than 9.6% of the world-wide market – is a 21st Century international partnership between a French and a Japanese company. This partnership between two leading automobile manufacturers has made both companies stronger and more competitive, and this week, there are talks to possibly include GM in this global auto alliance.

The global marketplace affords the American consumer choice and cost savings that are unprecedented in any nation’s history and has led to a standard of living that is the envy of the world, and we would not have this standard of living without America’s active participation in the global marketplace. International trade accounts for more than one-quarter of U.S. gross domestic product and supports more than 12 million U.S. jobs, including 1 in 5 manufacturing positions. And, with 95% of the potential customers for American products now living outside the U.S., the best is yet to come.

That’s why President Bush sees free trade as so critical to our nation’s economic future, and why he has so actively promoted Free Trade Agreements to open more international markets to American products and services. Free Trade Agreements accelerate economic growth by allowing greater competition, encouraging the formation of international partnerships, and opening markets. They also shrink trade deficits: exports to our Free Trade partners are growing twice as fast as our exports to the rest of the world. So far this administration has negotiated Free Trade Agreements with 15 countries and is currently negotiating with 14 more. This is more Free Trade Agreements than any past Administration.

New Reality #2: Competition is intense, and the pace of change will continue to accelerate. It took 55 years for the automobile to spread to one-quarter of the U.S. population. It took 35 years for the telephone to do the same thing. The personal computer accomplished the same level of market penetration in 16 years, 13 years for the cell phone and only 7 years for the Internet.

There are good jobs that exist today that we couldn’t even dream up two years ago: Podcast manager…Blog writer…I-Pod accessory manufacturer…Satellite radio host.

Even the nature of innovation itself is changing: Innovation is becoming multidisciplinary as different technologies converge to create new fields that didn’t even exist a few decades ago. Lectrosonics’ Digital Hybrid Wireless, a revolutionary convergence of digital audio with an analog FM radio, is an example of this, and, elsewhere, many economists now believe that fields like bioinformatics or nanotechnology will become major drivers of the future U.S. economy.

This new reality where cycle times for products and ideas continues to shrink and technologies converge will require all institutions – public, private, educational, and non-profit – to continually adapt and change. Those that don’t are at risk. Those that do will be rewarded.

New Reality #3: Yes, the world becomes a bit more complicated every day – but that’s a good thing – it shows the advancement of not just the American people, but civilization as a whole. But in responding to this increased complexity, we must realize that we have reached a point where the components of competitiveness can no longer be pursued separately. Just as technologies are converging to create new fields of innovation, so are the components of competitiveness merging to shape economic growth in the 21st Century.

This reality holds two important lessons for the local and regional level:

First, the idea of workforce development, community development, economic development, and educational programs occurring in separate silos can no longer be tolerated. One of the first steps to success in the 21st Century, besides acknowledging and embracing its new realities, is to begin to collaborate at all levels. The interconnected challenges of workforce, education, community and economic development must be tackled in concert – with each element leveraging the other. The resources available for each competitiveness component are important and precious, and we must use them to their full advantage.

One of the most important convergences that we must facilitate is that between economic development and workforce development. While the physical infrastructure component of economic development is a critical part of a successful growth strategy, it is the talented people that use this infrastructure to create the new ideas and innovative technologies that make the American economy the envy of the world.

The education and training that sparks this creativity gives our workers cutting-edge skills that are key to economic development, and it is encouraging to see the growing interest across the nation in aligning the work and the resources of economic development organizations and workforce organizations.

Second, we need to look beyond traditional political jurisdictions – the city boundary, the county line, even the division between States – and work together. Because the competitiveness of America’s companies is in large part tied to the competitiveness of the economic regions in which they do business.

Pooling resources and developing unified regional development strategies that capitalize on these types of resources are perhaps the most important steps that State and local entities can take to better compete in the world-wide marketplace.

New Reality #4: Collaboration with the private sector becomes more critical every day. While governments at all levels and non-profit institutions can be important players, let’s not forget that the private sector is the most important element of any successful economic development strategy. Unless the private sector is ready, willing and able to invest in a community, economic growth simply will not occur, regardless of how much government spends.

The private sector should have not just a seat at the table, but should be actively engaged as full partners in strategies for economic growth.

Educational institutions – including high school and especially community colleges – should be working hand-in-hand with business to ensure that there are sufficient local workers with the right skills for the job environment of today, and tomorrow. CNM’s Workforce Training Center, which I know is very engaged with the local business community, is a great example of this.

The private sector should be helping to shape – within the parameters of public accountability, of course – the development strategies that will lead to more higher-skill, higher-wage jobs. The days of “if we build it, they will come” are gone.

The 5th Reality is that America is positioned to win in the 21st Century. This nation has never encountered a challenge it has not met. We are the most competitive, productive, and innovative country the world has ever known:

• The U.S. has just 5% of the world’s population, but 40% of global wealth;

• The U.S. employs fully one-third of the world’s scientists and engineers and accounts for 40% of global R&D spending;

• America continues to be the country of choice for millions across the globe who are seeking learning and economic opportunity. And we are the most important market on the planet.

Of course, we’re here today to celebrate not America as a market, but America as a world class supplier to international markets. Exporting products and services is a principal way for companies to increase sales, expand their business and create high-wage jobs for more Americans.

Jobs in exporting plants pay wages that average up to 18% more than jobs in non-exporting plants. America's dynamic high-tech sector depends on exports. Annual exports of advanced technology products total about $180 billion. When U.S. firms increase their exports, they help build a stronger American economy and increase economic prosperity at home, and across the globe.

This is why the Bush Administration is committed to helping U.S. firms access new markets, which is the mission of the Commerce Department’s Commercial Service. The Department's Export Achievement Award recognizes the Commercial Service’s export business clients that have successfully partnered with government to take advantage of international export opportunities that support jobs here at home.

Today, I have the honor of recognizing Lectrosonics – an outstanding example of a business right here in Albuquerque that has achieved success in the global marketplace.

Lectrosonics started out in 1971 making amplified lectern systems and built itself into a manufacturer of a wide variety of wireless audio equipment for use in multiple industries including entertainment, professional sports, and corporate/government. In fact, at the 2004 Academy Awards, the top five picture nominees and the top two winners, including Lord of the Rings, used Lectrosonics’ wireless microphone systems for film production.

Lectrosonics has displayed great dedication and patience in pursuing sales opportunities in international markets, selling to Europe, Asia, and throughout the Americas – including Canada. Looking to further expand its export sales abroad, the company has worked in partnership for more than 10 years with the U.S. Export Assistance Center in Santa Fe, receiving export counseling, market research, trade events, and other services.

Lectrosonics reports that international markets have contributed substantially to their growth. Export sales have increased from 2001 to 2005 from approximately $1.8 million to $3.6 million, and this represents a significant increase in terms of export sales as a percentage of total company revenues. Export sales are now 15% of total sales versus 4% in 2000.

The Department of Commerce is pleased to be assisting a growing New Mexico Company as it expands into the global marketplace – and the Department of Commerce is proud that we have played a small role in their success.

Now, on behalf of President Bush and Commerce Secretary Carlos Gutierrez, it is my distinct pleasure to present Mr. Gordon Moore, Vice President of Sales of Lectrosonics. with the Department’s Export Achievement Certificate in recognition of Lectrosonics’ international sales efforts. Mr. Moore, congratulations.

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