As Toyota was searching for a place to build a new truck plant, San Antonio was bubbling to the top of the list. The city - and the whole state, really - had everything the automaker was seeking, including a prime location, excellent infrastructure of all kinds, a can-do attitude, a business-friendly environment, and a lucrative market of its own.
But there was a bit of a hiccup, acknowledges Aaron Demerson, executive director for economic development and tourism in the Texas governor's office. "We had a logistics issue with Toyota, and discovered they were $15 million to $18 million short on a need that they had," he says. "We were able to find that money, but it wasn't easy."
One could say that all's well that ends well, but the state didn't stop there. Texas leaders' can-do attitude led to a solution designed to prevent such last-minute scrambles in the future. "The Texas Enterprise Fund is our deal-closing fund," says Demerson. "It was created about four years ago. If there is a gap identified after you have the incentives at the local level and training dollars and the enterprise zone program, this allows us to really seal the deal."
It was a smashing success, so much so that the state continues to replenish the funds, and other states have tried to follow suit with deal-closing funds of their own. The money spent is a tremendous deal when one considers the investments that the fund has catalyzed, says Demerson: $15 billion in capital investment creating 45,000-plus jobs, with some $330 million in Enterprise Fund dollars helping to pave the way.
For example, he says, Countrywide Financial's decision to move some operations to Texas translates into 7,500 jobs and a $200 million investment. Roughly $50 million from the fund helped Texas Instruments decide to create 1,000 jobs in Richardson and spend some $3 billion in capital investment. Another $2.5 billion investment from Samsung means more jobs in Austin, he says.
Among other recent Texas Enterprise Fund victories, Fidelity Investments will expand its Westlake facility and Comerica, Inc. will come to Dallas. Thanks to an $8.5 million Enterprise Fund grant, Fidelity will build a new state-of-the-art, 600,000-square-foot building and add 1,535 new jobs. Comerica will be relocating its corporate headquarters from Michigan to Dallas, creating more than 200 jobs with the help of a $3.5 million Enterprise Fund grant.
Feeding Emerging Technology
"If you have a product and are trying to commercialize it, we can help," says Demerson. The state's Emerging Technology Fund is an increasingly active vehicle to do just that. "We're trying to make sure that businesses that are growing here, stay here. It's a program that allows us to really home-grow business."
Says Texas Governor Rick Perry, "Technological innovation is the lifeblood of today's economy. These funds allow Texas to invest in technologically innovative companies which are key to driving competition and advancement."
The fund was created about two years ago, according to Demerson, and seeded with about $200 million. For the most part, the fund supports technology companies in their early stages, but it's also intended to help attract leading research teams to Texas universities to help create even more innovations that in turn can support more business growth.
For example, a $3.5 million grant to the University of Texas at San Antonio was used to recruit Ravi Sandhu, Ph.D., a nationally recognized leader in cyber security. Dr. Sandhu is now the executive director and chief scientist at the university's Institute for Cyber Security Research.
"Opportunities such as this help move UTSA to the forefront of research and innovation," says Ricardo Romo, the university's president. "UTSA will be able to expand critical research in cyber security and build a multidimensional institute to meet the challenges that face our country's technology infrastructure."
Demerson says attracting researchers of this caliber will pay handsome dividends, so it's worth making a healthy investment to do so. "It's the George Steinbrenner model," he says, referring to the legendary New York Yankees owner with the fat wallet. "We're going to pay for that talent."
Other recent uses of the Emerging Technology Fund include:
• A $2 million grant that will help Xtreme Power, Inc. of Kyle develop a large-scale energy load-leveling system. It'll help make the process of storing and delivering large quantities of electric power more efficient.
• A $600,000 grant to Lynntech, Inc. of College Station for ongoing development of its hydrogen fuel cell technology. The technology will be used for electrical power generation in machines such as wheelchairs, forklifts, and pallet jacks, as well as military and commercial aircraft support vehicles.
• A grant of $950,000 to Global Contours Ltd. of Rockwell, which is working on a patented Smart Concrete, capable of sensing infrastructure conditions in buildings, bridges, highways, dams, levees, and tunnels. It can detect infrastructure breaches and even be used to gauge the weight of trucks.
• An award of $749,829 to Photodigm, Inc. of Richardson to move along the development of its advanced laser technology used in communications, digital imaging, defense and medical devices. Among the defense uses of the technology are ultra-high-performance sensors for airborne detection of submarines.