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Regional Report: A Rosy Economic Outlook in the Southwest U.S.

With healthy jobs reports and numerous announcements for new and expanded facilities, the Southwest States will continue their economic growth.

Directory 2015
The well-known investment disclaimer states that past performance is not indicative of future results. It stands to reason that just because Texas has led the nation in job growth for four years in a row, that doesn’t mean growth will continue to sizzle in the future. And yet, analysts expect that it will. The same rosy outlook holds true in Arizona, and there are healthy jobs reports in New Mexico and Oklahoma as well.

Among the “Best States for Business”
As Forbes noted in November, Texas is leading the way in both current economic climate and expected future growth. The magazine cites statistics from Moody’s Analytics, predicting that Texas will record 2.7 percent annual job growth during the next five years, faster than any state. The rankings were part of the magazine’s “Best States for Business” feature, in which Texas placed sixth overall. Texas also earned a Gold Shovel award from Area Development earlier this year, based on its 2013 job growth of a quarter million jobs, increases in manufacturing employment topping 7 percent since 2010, and leadership in shipment of manufactured goods. There were some big headlines in 2013 in Texas, and even bigger ones in 2014.

The energy sector is fueling a lot of the Texas growth, to be sure. Everybody who is anybody in energy has set up shop in Texas, and there’s more refining and chemical production in Texas than anywhere else in the country. But that’s just a piece of the puzzle. The Gold Shovel Award also spotlighted growth in everything from professional/business services and education/health services to IT, mining, manufacturing, and the construction sector that all of this development tends to ignite. Consider that Toyota earlier this year decided to move its North American headquarters from California to the Texas community of Plano, which will mean about 4,000 jobs coming in, not just from California but also some from New York and Kentucky. Charles Schwab is making a similar move, along with Occidental Petroleum and Raytheon. Apple is in the midst of doubling its workforce in Austin, which will add almost as many jobs as the big Toyota announcement.
Everybody who is anybody in energy has set up shop in Texas, and there’s more refining and chemical production in Texas than anywhere else in the country. But that’s just a piece of the puzzle.
And SpaceX recently broke ground on a commercial launch facility near Boca Chica Beach. Like so many other Lone Star State projects, this one got a boost from the Texas Enterprise Fund, along with dollars from the Spaceport Trust Fund. The facility will launch commercial satellites into space, and it represents a vote of confidence from one of the biggest stars of the tech-focused business world, CEO Elon Musk. “We will begin an investment in South Texas that will create hundreds of jobs and over time contribute hundreds of millions of dollars into the local economy,” Musk promised at the groundbreaking.

Diverse Growth
Arizona picked up an Area Development Silver Shovel award in 2014. That was based on an excellent 2013, which saw diverse growth across a lot of sectors, from finance/insurance to IT, aerospace, advanced manufacturing, renewable energy, and biosciences. Examples of the success include a 5,000-job regional headquarters for which State Farm Insurance chose a Tempe site, and a Nationstar Mortgage project promising 1,200 jobs in Chandler.

As in Texas, the Arizona story isn’t just about great past headlines, but also the promise of future growth. Forbes ranks the state fifth in growth prospects, and the state has built upon its award-winning 2013 growth with a healthy 2014. Cloud-based human resources technology provider Zenefits launched a Scottsdale office in the fall that promises to grow 1,300 jobs, and Orion Health opened its North American R&D center there. Chandler is the site of General Motors’ fourth national IT center, which opened with 500 workers and is on its way to a thousand.
In all, according to the Oklahoma Department of Commerce, some 30,100 new jobs came to the state in 2013, more private businesses opened than closed, and per capita personal income has grown by nearly 5 percent in the past five years.
Diversity also is the key to prosperity in New Mexico. In all, at least a dozen new manufacturers chose to locate or expand in the state in 2014. Recent announcements there include 300 jobs at Global Fashion Technologies, a maker of recycled fibers that’s bringing headquarters and manufacturing operations to Belen. “New Mexico’s much improved business environment was a big part of our decision to locate here,” CEO Tom Witthuhn explained in making the announcement.

Add to that the 300 jobs that California-based food producer Flagship Food Group is bringing to Albuquerque. Franco Whole Foods, also from California, is expanding to Las Cruces. DHF Technical Products picked a site in Rio Ranchoa, and Santa Teresa is benefiting from the decision by Southwest Steel Coil, a California steel manufacturer, to more than double its workforce in New Mexico. Beyond manufacturing, there were announcements such as the bilingual call center Comcast is adding in early 2015 in Albuquerque. That’s worth 450 jobs, and it essentially doubles the company’s workforce in New Mexico.

Jobs Incentives
In Oklahoma, the Quality Jobs Program has a long list of success stories, with more added every month. Some of the most recent headlines have come from T.D. Williamson, a pipeline equipment company adding 230 jobs in Tulsa; Midstates Petroleum, an independent exploration and production company that’s bringing about that many new jobs to Tulsa; American Energy Management Services, pledging 525 jobs in an Oklahoma City expansion; and Enable Midstream Services, a management services company expanding in Oklahoma City with plans for more than 360 new jobs.

In all, according to the Oklahoma Department of Commerce, some 30,100 new jobs came to the state in 2013, more private businesses opened than closed, and per capita personal income has grown by nearly 5 percent in the past five years. On the Forbes list of “Best States for Business,” Oklahoma lands in the 10th position.

Compared to this time last year, the region’s jobless rates have declined to 4.7 percent in Oklahoma, 5.2 percent in Texas, and 6.9 percent in Arizona, and the rate in New Mexico has held steady at 6.6 percent. The gains in the gross domestic product in 2013 were 4.2 percent in Oklahoma, 3.7 percent in Texas, 1.5 percent in New Mexico, and 1.1 percent in Arizona, according to the U.S. Bureau of Economic Analysis.
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