Texas Today: Key Economic Drivers Attracting Business to Texas
Texas’ stable business climate, low taxes, outstanding transportation infrastructure, skilled work force, and pro-business environment are helping companies to succeed and create jobs.
Q2 / Spring 2013
Industry Clusters in Texas
In 2003 the Texas legislature passed SB 275, calling for the development of strategies to strengthen the state’s competitiveness in key growth industries — advanced manufacturing, aerospace and defense, biotechnology and life sciences, information and communications technology (ICT), petroleum refining and chemical products, and energy. For a decade, Texas has been developing innovative tools and strategies to support economic growth in these areas, including the TEF. These have been instrumental in attracting both major players and innovative startups to Texas, where they have been able to flourish, create jobs, and help establish Texas as an international leader in these key sectors.
Advanced Manufacturing: Advanced manufacturing includes nanotechnology, semiconductors, advanced materials, electronics, automotive, and micro-electromechanical systems. Recent announcements include Samsung Electronics’ commitment to invest up to $4 billion to upgrade its chip manufacturing plant in Austin and National Instruments plan to spend $80 million to expand its operations, creating up to 1,000 new engineering and research jobs in Austin.
Automotive is another booming segment of the advanced manufacturing sector and includes automobiles and light trucks, motor vehicle bodies, and auto parts. Texas’ motor vehicle industry exported about $18.5 billion in products in 2012. Toyota in San Antonio and General Motors in Arlington, two of the two largest automotive manufacturers in Texas, are supported by an extensive network of suppliers. GM invested about $1.5 billion in its Arlington plant from 1996 to 2012, which is the company’s only remaining U.S. location building full-sized SUVs. The company also plans to construct a $200 million sheet metal stamping facility that will employ about 180 workers.
Aerospace and Aviation: Texas has one of the most important, vibrant aerospace and aviation sectors in the country. It is home to two international airlines, 15 active military bases, and NASA’s world-famous Johnson Space Center. About 1,600 companies employ over 150,000 workers, making Texas one of the top three states in the country for aerospace research and development, manufacturing, as well as space exploration.
Commercial space travel R&D is rapidly evolving in Texas. In July 2012, XCOR announced the creation of its new Commercial Space Research and Development Center headquarters at the Midland International Airport. XCOR develops and produces reusable launch vehicles, rocket engines, and rocket propulsion systems.
Space Exploration Technologies (SpaceX) is also Texas-based — its engineers in McGregor, Texas, design and manufacture advanced rockets and space capsules, including the Dragon spacecraft, the first commercial vehicle to successfully dock with the International Space Station.
Biotech and Life Sciences: More than 3,500 biotechnology and life sciences firms in Texas generate an annual economic impact of $75 billion. Medical devices are one of the largest components of this sector and have grown substantially over the last five years, creating internationally recognized clusters that produce surgical, dental, orthopedic, medical, and laboratory products.
Texas is one of the top 10 states in the country for medical device companies — more than a dozen major companies operate headquarters or facilities in the state. And they keep coming! In May 2012, Greatbatch indicated it would establish a new global headquarters in Frisco as part of its overall medical device strategy.
“Frisco offers us proximity to an established medical device cluster, surrounded by a business community that includes leading medical technology firms, as well as strong access to talent and key industry opinion leaders,” says Greatbatch President and CEO Thomas J. Hook.
Information and Communications Technology: Texas ICT includes computers, software, telecommunications, and IT services. Major players in the state are Dell, Microsoft, Texas Instruments, HP Enterprise Services, VCE, Cisco, and National Instruments. Texas ranks second in the country for computer and video game employment. ICT is also the top sector in Texas for attracting foreign direct investment (FDI) — between 2008 and 2012, 64 foreign ICT projects were recorded, representing 14 percent of the state’s total FDI projects during this period.
Recent ICT announcements include CyrusOne opening a $45 million, 670,000-square-foot data center in Carrollton — the largest of its kind in the state. VISA USA plans to build a new global IT center in Austin, creating about 800 new jobs. TEKsystems Global Services also has plans for a $4.8 million, 500-job IT center in Irving (the state is providing $1.1 million through the Texas Enterprise Fund to close the deal).
“This center allows us to provide solutions and available technical talent to achieve results that are often not possible in other local markets,” says Randy Verdino, the firm’s vice president of applications. “We intend to leverage Irving’s tremendous wealth of talent at every level by working with local colleges for emerging skills and also hiring experienced people seeking new challenges.”
And, Apple plans to invest more than $300 million and create 3,600 jobs at a new IT campus in Austin. The mega-project, which is to be supported by $21 million from the TEF, doubles the size of Apple’s Texas work force.
Energy: When people think of oil and gas, they think of Texas — for good reason. New oil and gas reservoirs continue to be discovered in the Lone Star State. Texas leads the nation in crude oil and natural gas reserves, accounting for 24.2 percent of the nation’s oil reserves and 29.5 percent of the nation’s natural gas reserves. This outstanding performance is being driven by the recovery of oil and natural gas from the Eagle Ford Shale and Barnett Shale using hydrofracturing methods — by 2020 it is expected that nearly 5,000 new oil and gas wells will have been completed in these regions. Although Texas is better known for its oil than its sustainable energy reserves, it also leads the nation in installed wind energy capacity (10,394 MW as of January 2012) — more than double the capacity of the next largest installed wind energy capacity state, Iowa. Texas is home to six of the 10 largest wind power projects in the nation and two of the three largest wind farms in the western hemisphere, Roscoe Wind Farm and Horse Hollow Wind Farm.
Petroleum Refining and Chemical Products: Texas also has a long history of leading the nation in petroleum refining and chemical products production. More than 400 chemical plants and refineries along the Texas Gulf Coast represent the largest petrochemical complex in the world and employ about 33,000 Texans. Twenty-six petroleum refineries process about five million barrels of crude oil per day. The ExxonMobil refinery in Baytown is the number-one refinery in the nation for input capacity based on barrels per calendar day, and seven others are ranked in the top 20 — all of which contribute to Texas accounting for 26.6 percent of the nation’s oil-refining capacity.
Chemical manufacturing is closely related to petroleum refining because it frequently converts natural petroleum, petroleum byproducts, and other materials into thousands of chemical compounds for use in manufacturing or other industries — including pharmaceuticals, fertilizers, and construction materials. Texas’ chemical manufacturers account for more than 50 percent of total U.S. chemical production. Recent development news includes Ascend Performance Materials’ plans to construct a $1.2 billion propane dehydrogenation facility in Alvin to manufacture propylene, a common chemical building block for plastic and synthetic fiber products.
…And Big Projects Keep Coming
Tenaris recently announced it would build a new, $1.3 billion steel pipe manufacturing facility in Matagorda County, creating 600 jobs. The one-million-square foot plant will include a state-of-the-art seamless pipe mill, heat treatment, and premium threading facilities. When completed, the plant will produce 600,000 tons of pipe annually for the energy industry. The state is providing $6 million through the Texas Enterprise Fund (TEF) to close the deal. Governor Perry recruited company leadership during an economic development trip to Italy.
“We appreciate the assistance provided by the Governor, his staff, and the many local officials involved in this significant milestone for Tenaris,” says Tenaris North America President Germán Curá. “We chose Texas and Matagorda County because of the strong business climate and its proximity to transportation hubs, a skilled work force, and Houston, which is the epicenter of the energy industry and home of our North American headquarters. We look forward to a long partnership with the community and making a lasting contribution to the state and Matagorda County.”
“The most profound statement about our favorable economic climate comes when companies like Tenaris make an investment of this size in our state. That says that not only is Texas the best place for them to grow their businesses now, but they’re confident it will remain that way moving forward,” concludes Governor Perry.
And, in early May, Emerson Process Management announced plans to expand one of its major facilities in Houston, creating 126 new jobs and representing $9.5 million in capital investment. The state is providing $1 million through the TEF to close the deal on this project.
“Our history in Texas dates back to 1929 and this area remains critical to our growth plans and service level commitments,” said company President David Plum. This facility serves as a center of excellence for valve automation engineering and manufacturing expertise, while providing a showroom where customers can work directly with Emerson employees to develop solutions and improve products.
A Letter from Rick Perry, Governor of Texas
Texas Wide Open for Business is more than just a promise — it’s an environment we’ve created in the Lone Star State to stimulate business growth, train the future work force, and make Texas the greatest place to live and raise a family. For many years now, Texas has been providing businesses the opportunity to grow and prosper in a state with unparalleled infrastructure, a premier geographic location, a predictable regulatory environment, and a well-educated work force of 12.6 million Texans. The fact that Texas has led the nation in job creation for more than a decade is proof of our success.
As a global leader in economic development, Texas is committed to working alongside employers worldwide to ensure ideal conditions for job creation and economic prosperity. This is why Texas has tools like the Texas Enterprise Fund — a “deal-closing” fund for projects that offer significant projected job creation and capital investment — to ensure the growth of Texas businesses and create more jobs in Texas.
In addition to our exceptional quality of life and robust economic climate, Texas has one of the lowest business tax burdens in the United States. Texas also levies no personal income tax, allowing businesses to pass on more value to their employees.
Texas continues to be in the spotlight for attracting companies and jobs from around the globe. Month after month, the Lone Star State tops business rankings for business climate, job growth, and its growing communities. Texas is a leading state for Fortune 500 and 1000 companies and is the No. 1 exporting state in America for the 11th year in a row. It’s no wonder that in two recent surveys, CEOs and site consultants ranked Texas as the “Best Business Climate” in all 50 states.
Texas is doing what it takes to help businesses succeed and create jobs. That’s why as Governor of this great state, I invite you to come and see why Texas Wide Open for Business is more than a promise — it’s a reality. For more information, please visit www.texaswideopenforbusiness.com.
Governor of Texas