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Texas Enjoys a Competitive Edge in Today's Global Economy

Lisa A. Bastian (Apr/May 08)
(page 2 of 4)
Sizzling Clusters
In 2004 the state identified six rapidly growing industry clusters thought to be key to pushing Texas into the position of a world economic leader - if changes were made to improve its competitive position. Then, last December, Texas launched the Governor's Competitiveness Council. Made up of 29 government, industry, and education leaders, the council is charged with the task of identifying barriers to global competitiveness and figuring out how state resources can help Texas' industries attract/retain more key employers.

Some of the state's competitiveness challenges include establishing a sizable and capable work force in each industry cluster, and improving the state's education, transportation, energy, and regulatory climates. The council hopes to have ideas to share with state representatives before the start of its 2009 legislative session. Furthermore, Texas Governor Rick Perry recently said he'd apply competitiveness standards to future legislation. That means each bill will be assessed a "Competitive Impact Score" to help determine if signing it will make Texas more - or less - competitive in the global economy.

Here is a brief look at the six targeted clusters, with statistics provided by the state government (unless otherwise noted):

Aerospace and defense: Some of the world's most advanced military aircraft are designed and built in Texas. This industry is responsible for 200,000 jobs at 1,700 firms, and has workers earning an average annual salary of $50,000. Major aerospace and aviation employers include American, Southwest, and Continental airlines; American Eurocopter; BAE Systems; Boeing; the Johnson Space center; L-3 Communications; Lockheed Martin; and Raytheon. The state is home to 23 airports with ports of entry. In 2006, the Dallas-Forth Worth International Airport set an all-time international cargo record with 281,486 metric tons.

Energy: Oil and gas exploration and production, one of the state's oldest industries, is strong with 7,000 operators running 250,000 active wells. The state leads the country in production and reserves as well as enhanced oil recovery potential. In the electric, coal, and nuclear power generation arena, Texas has one of the world's strongest electric markets. In the alternative energy area, Texas has ranked number one in the nation for wind power generation for three consecutive years, according to the Wind Energy Association, and the Governor's office reports it ranked first in biofuels and second in solar power.

Biotechnology and life sciences: The state is home to over 900 traditional biotech and biomedical research facilities, medical manufacturing firms, and world-class universities and research facilities employing almost 29,000 life science workers. Major players include US Oncology, the Southwest Research Institute, Laboratory Corporation of America, Kimberly-Clark, and Abbott Laboratories.

These days, San Antonio is in the industry limelight. For example, it's one of five cities being considered for the National Bio- and Agro-Defense Facility, a huge federal research lab. And the Department of Defense is in the early stages of investing over $1 billion to make Fort Sam Houston the nation's center of military medicine. Existing major facilities here include the University of Texas Health Science Center at San Antonio (a nationally recognized institute of health science education and research) and the Southwest Foundation for Biomedical Research (one of the world's leading independent biomedical research institutions).

Information and computer technology:
Communications equipment, computing equipment and semiconductors, and information technology form this growing cluster. Austin, the state capital, is a world-class IT hub, and San Antonio has its own industry star performers. Recently, the University of Texas at San Antonio established the Institute for Cyber Security. Its mission is to combine world-class research with commercialization, focusing on the protection of the nation's critical cyber infrastructure. The Alamo City also was chosen for a new National Security Agency data center (expected to employ thousands when built out) and Microsoft's $550 million, 447,000-square-foot facility, set to open in late 2008/early 2009. Major IT employers present here speak of the industry's importance to the Lone Star State. They include Dell, Nokia, Texas Instruments, Alcatel USA, Ericsson, Freescale Semiconductor, and Fujitsu Network Communications.

Petroleum refining and chemical products:
The latest federal government statistics from the Energy Information Administration (July 2007) reveal that nine of the 20 top-producing U.S. petroleum refineries are in Texas; of those, the three highest-capacity are in Baytown (ExxonMobil, #1), Texas City (BP, #4) and Beaumont (ExxonMobil, #6). Texas is the nation's top producer of oil and gas refined products and chemicals, and one-third of the U.S.-marketed production of natural gas is from here.

One homegrown industry star player is San Antonio-based Valero Energy Corporation, a Fortune 500 company with 22,000 employees and annual revenues of $95 billion (2007). It owns and operates 17 refineries throughout the United States, Canada, and the Caribbean with a combined throughput capacity of approximately 3.1 million barrels per day, making it the largest refiner in North America.

Texas also is the country's largest chemicals producer; its Gulf Coast area alone has over 200 chemical plants. In total, this cluster brings in over $82 billion in gross state product, and is responsible for 870,000 jobs and $3.6 billion in annual state revenues.


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