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Regional Report: Reaching for the Stars in the Southwest

Most of the Southwest is enjoying better job growth than the nation as a whole, and all of these states have ramped up their economic development efforts.

Steve Stackhouse-Kaelble (Directory 2014)
There are lots of wide-open spaces across the Southwest, plenty of desert and beautiful things to see. There’s also more innovation and cutting-edge technology development than many outsiders may realize. And new jobs are sprouting all over — three of the four states in this region enjoy jobless rates below the national average.

Job Growth
Texas, in particular, is creating jobs at a powerful clip. Its energy sector continues to be an economic engine — no surprise there — but many of the biggest economic development prizes recently have involved technology and financial services. The state boasts a long list of announcements with new job figures in the triple digits (and occasionally quadruple digits): 1,000 jobs at GEICO, 200 at Oracle, and 680 at USAA, for example. And the first smartphone to be assembled in the U.S. hails from the Flextronics plant, where Motorola phone assembly promises up to 2,500 new jobs.

One of the biggest stories out of Texas in the past year or so, though, was the announcement of the new Apple Inc. campus in Austin, where more than 3,000 new jobs could grow in the next decade, adding to the more than 3,000 Apple jobs already in town. It was a huge feather in the cowboy hat of the Lone Star State, and helped Texas earn one of Area Development’s Gold Shovel awards.

Truth be told, technology giant Apple is making a big mark across the whole Southwest region, not just Texas, as it brings a decent chunk of manufacturing and other services back to North America. Arizona was one of the states that lost out to Texas in that Apple announcement, but more recently, the company made a big splash in Mesa with plans to buy an old factory for sapphire glass supplier GT Advanced Technologies. The project is expected to create up to 700 manufacturing jobs along with 1,300 temporary construction and related jobs needed to get the facility up and running.

Other recent successes in Arizona include the announcement that California-based data and online service provider Gigya has opened up in Phoenix and plans to hire up to 200.

“Arizona’s proximity to California represents tremendous opportunity for California-based companies like Gigya looking to expand,” Sandra Watson, president and CEO of the Arizona Commerce Authority, noted when the announcement was made. Other tech companies are growing, too, including Garmin in Chandler and GoDaddy in Tempe.

Arizona has had a tougher time bouncing back from the recession than many states. Just seven states lost more jobs than the 297,000 that evaporated between December 2007 and February 2010 — that was 11 percent of the state’s workers — and only one state lost a greater proportion. Since bottoming out, the state has recovered just over 40 percent of its losses, but the national economy is approaching 80 percent. Even so, its governmental actions have been winning favor and its gross domestic product is bouncing back.

Reaching for the Stars
New Mexico is literally reaching for the stars in its economic development efforts. Its Spaceport America is the world’s first spaceport built from the ground up to host private space ventures — a prominent tenant is Sir Richard Branson’s Virgin Galactic commercial passenger space line.

Space Exploration Technologies Corp., or SpaceX, was a new tenant in 2013. The company is working on its Grasshopper project, creating technology to enable a rocket to make a vertical landing and return to the launch pad intact, as opposed to burning up when re-entering the atmosphere.

There’s plenty of history to be found across New Mexico — one reason tourists visit — but there’s a whole lot of future within the borders, too. Fueling innovation is a strong engineering sector in Albuquerque, which Forbes has ranked as high as seventh among the nation’s engineering hubs.

Meanwhile, General Dynamics Information Technology recently announced that 200 new back-office support jobs are on the way to Las Cruces, New Mexico, where it will add onto an existing facility. That news followed on the heels of announcements of nearly 200 more jobs at four companies in the southeastern part of the state: AGPower, Leprino Foods, Stewart Industries, and Dean Baldwin Painting.

In Oklahoma, manufacturing expansion has been in the news, as Whirlpool announced plans to add 150 workers, invest nearly $19 million, and make a new cooking product at its plant in Tulsa. Meanwhile, AT&T made plans to add more than 100 customer-support jobs in Oklahoma City, and Australia’s Ferra Engineering announced an expansion of its aerospace-focused operation.

All of this activity has driven the region’s jobless rates down to 5.5 percent in Oklahoma, 6.2 percent in Texas, and 6.6 percent in New Mexico. Arizona’s most recent rate was 8.2 percent. The gains in the Texas gross domestic product were second-highest in the nation in 2012, at 4.8 percent. Arizona’s GDP grew by 2.6 percent, and the figures were 2.1 percent in Oklahoma, and 0.2 percent in New Mexico.

New Initiatives
Business and governmental leaders in the Southwest continue to seek new ways to spark new growth, in big cities and small towns alike. For example, among Arizona’s economic development pushes lately is a focus on rural development. Its Certified Sites program shines a spotlight on ready-to-go rural commercial sites for development and expansion projects, and the Rural Economic Development Grant is geared toward rural communities making infrastructure improvements to attract business.

New Mexico continues to work on improving the tax environment, hoping to attract new businesses. As it stands, manufacturers enjoy a corporate income tax close to zero percent, while other job creators have seen business taxes decline by 22 percent. The state also continues to capitalize on its proximity to Mexico. Beyond efficient border crossings, the state hopes to land global investments with the recently announced, master-planned bi-national community involving Santa Teresa in New Mexico and San Jerónimo in Mexico, built around the border crossing there.

Among the tools Oklahoma is using to build the economy is its Quality Jobs Program, which offers quarterly cash payments to companies creating jobs. Among those spotlighted in the most recent Quality Jobs report are Terex USA and the American Cancer Society, both creating jobs in Oklahoma City.

Texas continues to reap the benefits of a major arsenal of economic development tools, the most prominent of which is the Texas Enterprise Fund. It’s the largest “deal closing” initiative in the country, offering cash grants for projects that promise jobs and capital investment. Awards have ranged from six-digit incentives to as high as $50 million. Innovations are supported by the Texas Emerging Technology Fund, which encourages commercialization of new technologies, public-private partnerships, and efforts to boost the research credentials of Texas universities.

Accolades from outsiders are far too numerous to list in full. Some of the highlights include the Forbes Best States for Business, which put Texas in seventh place and Oklahoma in 14th. Texas ranked 11th on the Tax Foundation’s State Business Tax Climate Index, and was listed as the nation’s second-fastest-growing tech state in the Cyberstates 2013 ranking. Arizona was sixth on the American Legislative Exchange Council’s list of states with business-friendly policies.
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