The Cutting Edge : Land of Disenchantment : In New Mexico, Some Residents Are Having Second Thoughts About Intel’s Latest Chip Plant


A year ago, this scrubby suburb of Albuquerque crowed when it beat out rivals in California and elsewhere as the site of Intel Corp.'s latest billion-dollar computer chip plant.

Enticed by the promise of high-wage jobs, the town’s economic development team ponied up big tax breaks and other incentives. Intel loudly praised New Mexico’s business climate, so much friendlier than its home state’s high costs and onerous regulations.

But these days--as Intel clashes with environmental groups and the neighboring village of Corrales over air quality, water use and population growth--New Mexico seems decidedly chillier. You’d almost think Intel was building in California.

Even as construction of the new plant proceeds, teams of Intel lawyers and managers have been slogging through hours of hearings that will decide whether the company gets access to the hefty volumes of water required to make computer chips.


June will mean more meetings with state officials and nearby residents, who last year blamed foul odors emanating from two existing Intel plants at the site for skin rashes, nausea and other ills.

The unexpected opposition is giving Intel its own headaches and serves as a cautionary reminder for other companies that the grass isn’t always greener somewhere else--especially in western locales where the environment is fragile and water scarce.

“Many people live in these places because companies like Intel are not there,” said Philip M. Burgess, president and senior fellow of the Center for the New West, a think tank in Denver. “They move for the pristine valleys. The last thing they want is another cloverleaf. This kind of resistance will be popping up more and more around the West.”

Bill Sheppard, Intel’s manager of the Rio Rancho site, acknowledged that the opposition caught the company by surprise. Even though no one expects the wrangling to derail the plant, it has caused consternation at Intel and added to the already huge cost of keeping pace in the fiercely competitive semiconductor industry. And echoes of the complaints are already being heard in Chandler, Ariz., just announced as the site for Intel’s next plant. All this suggests that the intensified anti-growth sentiment cropping up in New Mexico and Arizona might eventually make California look like a better bargain.


In the Albuquerque area, community activists contend that jobs will mean little if industry destroys the quality of life that drew people to the Rio Grande basin.

Tim Kraft, who served as former President Jimmy Carter’s appointment secretary and now lives below the mesa where giant cranes are helping to sculpt the new Intel plant, put it this way at a Corrales town meeting: “We’ve rolled out the red carpet, and now we’re finding out our guest has bad breath and an unquenchable thirst.”

Like a number of smaller California companies, Intel was drawn to Rio Rancho, about 10 miles north of Albuquerque, by the clean air, the nearby Sandia Mountains, the pleasant lifestyle--and the cheap labor. The Silicon Valley pioneer, based in Santa Clara, Calif., opened its first Rio Rancho plant in 1980 and had 2,700 workers when the expansion was announced in 1993. Their production accounted for 70% of Intel’s $8.8 billion in sales last year.



Buoyed by the phenomenal demand for its microprocessors, which compose the “brains” of most of the world’s desktop computers, Intel last year zoomed ahead of Japanese rivals to become the world’s leading chip maker. The company has expanded rapidly in Rio Rancho and elsewhere.

Securing the new Intel fabrication plant, designed to produce Intel’s state-of-the-art Pentium processors and the next-generation P6 chip, was a coup for Rio Rancho, a town of 40,000 with a checkered past but a hunger for progress. Its founders served time in jail in the 1970s for violating federal law by peddling barren lots through the mail.

Officials recruited Intel’s “Fab 11,” as the expansion is called, with an incentive package valued at $114 million. The big project--for which Intel says construction costs could climb as high as $1.8 billion--has already provided jobs for 3,000 construction workers. Once completed in 1995, the new plant is expected to employ 2,400 people--up from initial projections of 1,000--bringing the total site payroll to $185 million a year.

For New Mexico officials, aching to break free of the state’s dependence on natural resource and government jobs, such manufacturing holds great allure. The average Intel wage in Rio Rancho is $35,000 a year, more than twice the state’s average per-capita income.


Young New Mexicans say the plant offers the sort of career opportunity that has been rare. “It’s a place to work if you want to stay in the state,” said Sarah Chavez, an environmental engineer hired by Intel straight out of the New Mexico Institute of Mining and Technology.

Burgess said local economic development directors often get caught up in the enthusiasm of snaring a company but that the tax subsidies provided as a lure can end up costing current residents in higher property taxes to pay for more schools, roads and hospitals.

In nearby Corrales, where many residents live just yards from Intel’s chain-link fences, the costs of the new plant can seem large. This historic village was founded nearly three centuries ago by descendants of Spanish conquistadors, who carved out long, skinny farms along the Rio Grande and dug irrigation canals that enabled them to grow crops despite the arid, sandy conditions.

Today, the 7,500 residents are an eclectic mix of alfalfa farmers, physicists, doctors, lawyers and artists, many of whom keep horses and burros in their yards. The dirt roads and sagebrush are giving way to pavement in a glaring sign of the profound changes coming to this desert community. Yet most Corralenos, as the residents call themselves, still pump their water from shallow wells that tap the extensive aquifer that also serves Albuquerque.


Barbara and David Rockwell moved from Tucson in 1978, drawn by Corrales’ rural charms and rose-hued adobes. Every weekend, they saddle up the horses they keep in their yard at the end of a rutted dirt road and ride through the bosque (pronounced boskay), the cottonwood forest that lines the Rio Grande.

Last year, David Rockwell spent $1,000 on medical bills because of persistent headaches and a rash. After comparing notes, he and other neighbors surmised that a sour smell emanating from Intel might be the cause, and they began a campaign of complaints.


While maintaining that its chemicals meet federal guidelines and are not responsible, Intel nonetheless decided to experiment with new chemicals and installed $10 million of thermal oxidizers and other pollution-abatement equipment. At the June hearings, the company hopes to win the state’s permission to activate the devices.


In recent months, the health complaints have wound down. Of far greater concern now to Corralenos is Intel’s gigantic thirst.

When Intel picked Rio Rancho, conventional wisdom held that the area was blessed with a boundless aquifer. The company applied for permits to drill three wells, each 2,000 feet deep, to draw as much as 4 million gallons a day. But soon after, a U.S. Geological Survey report noted that the water table had fallen and that the underground supply might prove inadequate in a few short decades, given the region’s industrial and population growth.

“We could have a situation where everybody’s well runs dry,” Barbara Rockwell said. “You have this hanging over your heads. The quality of our life is really seriously compromised.”

She and other activists suspect that State Engineer Eluid Martinez will grant Intel’s well permits by mid-June but will require the company to honor promises to cut water use by 40%.


Although skeptical, Rockwell takes some satisfaction that both Intel and economic development officials have learned some lessons. Once quite insular, Intel has formed a community advisory group and become more involved in local affairs. It also agreed--with New Mexico’s two national laboratories, Sandia and Los Alamos--to explore ways to reduce water use.

Intel also maintains that it has no regrets about picking Rio Rancho. “We’re not about to walk away from ($2 billion) in investments,” spokesman Richard Draper said. “We plan to be here a long time.”

Times staff writer Donald Woutat in Sacramento and researcher Norma Kaufman in San Francisco contributed to this report.