Regional Report: Building Economic Momentum in Oklahoma
Oklahoma seeks to capitalize on recent growth by continuing to diversify its economy, upgrading its educational system, and strengthening its brand.
Hamilton says he is excited to be “part of the positive momentum happening in Oklahoma,” drawing parallels to some entrepreneurs who had arrived in the 19th century. “We feel a lot like I’m sure the early settlers during the Oklahoma land rush felt when they were opening up a whole new world of growth to the West,” he notes.
Oklahoma experienced a recession in 2015 and 2016, but its fortunes improved in 2017 and the state enjoyed a strong 2018 economically, seeing growth in the energy, manufacturing, and services sectors, according to the Oklahoma City branch of the Federal Reserve Bank of Kansas City. Job growth in the state exceeded the national rate for most of 2018 with particularly strong numbers coming from Oklahoma City and Tulsa. Unemployment numbers were the best in more than a decade, falling below the national average.
Gov. Kevin Stitt, who took office in January 2019, says Oklahoma has an array of core strengths to tout to the business community: “Our central location for distribution and manufacturing, our access to the ocean through the most inland port in the Port of Catoosa, our competitive utility prices, our rich natural resources, our consistently low cost of doing business, and our hard-working people are all assets that Oklahoma is promoting to continue to develop our spot in the global marketplace.”
Hamilton believes the “strong leadership” and business background of Stitt, the former chairman and CEO of Gateway Mortgage Group, is one of the state’s selling points. “As a fellow successful entrepreneur, he knows the challenges and what it takes to build, grow, and sustain a business,” says Hamilton. “He’s a compelling spokesperson for the state whose passion for business development is evident.”
Hamilton says the availability of experienced and entry-level tech workers and the “overall affordability and quality of life” played a key role in his company’s decision to target Oklahoma for a new facility. Home prices in Oklahoma City are approximately 35 percent lower than the national average, according to Sperling’s Best Places to Live, and “this cost savings for our colleagues, coupled with the quality of life and the culture of the city, made OKC a perfect fit for us.”
Our central location for distribution and manufacturing, our access to the ocean through the most inland port in the Port of Catoosa, our competitive utility prices, our rich natural resources, our consistently low cost of doing business, and our hard-working people are all assets that Oklahoma is promoting to continue to develop our spot in the global marketplace. Governor Kevin Stitt, Oklahoma Hamilton also points to the city’s one penny sales tax that funds programs to enhance the quality of life for its residents. “We have found that Oklahoma is not only a good place to do business, but a great place to live,” he says. “With a low cost of living and great quality of life, it is the type of state that breeds successful teams and culture.”
Oklahoma’s economy starts with the energy industry, as it has for decades. The state ranks third in the nation in natural gas production and fourth in crude oil production, and annual operations from Oklahoma’s oil and natural gas industry generate $1 out of every $5 in gross state product, according to the Oklahoma Energy Resources Board. More than a dozen of the 100 largest natural gas fields in the U.S. are in Oklahoma, according to the board, and approximately 20 percent of the state’s jobs are directly or indirectly supported by the industry.
Hamilton advises the state should aim to reduce its dependence on the energy industry over the long term, although he believes Oklahoma has made “great strides” in diversifying its economic tax base. He thinks the Oklahoma economic picture is growing brighter in part because state leaders “are actively embracing the need to diversify the economy and have successfully attracted numerous technology companies, including Rural Sourcing…This diversification will play a major role in securing the long-term financial future for the state,” he says.
Aerospace and defense is the state’s fastest-growing industry. According to Gov. Stitt, who met with aerospace companies at the Paris Air Show in June, since 2015, the Oklahoma Department of Commerce has assisted with business announcements from aerospace companies creating more than 7,000 new jobs and more than $700 million in planned capital investment. Pratt & Whitney, Kratos Defense & Security Solutions, and Cobham are among the aerospace and defense companies to make expansion or investment announcements for Oklahoma so far in 2019.
More than 1,100 aerospace entities currently have operations in the state, including companies such as Rolls Royce, Raytheon, Boeing, and Lockheed Martin, and more than 120,000 Oklahomans are employed in aerospace and defense. The Governor noted that the American Airlines Maintenance and Engineering Center in Tulsa and the Oklahoma City Air Logistics Complex at Tinker Air Force Base are the largest maintenance, repair, and operations (MRO) facilities in the world.
In order to keep the economic momentum going in Oklahoma, several challenges must be addressed. Monty Hamilton says Oklahoma’s education system represents the state’s stiffest economic development challenge. Education Week ranked Oklahoma’s education system No. 48 in the country with an overall grade of D+, while giving the state particularly low marks for school finance and K-12 achievement.
More than 1,100 aerospace entities currently have operations in the state, including companies such as Rolls Royce, Raytheon, Boeing, and Lockheed Martin, and more than 120,000 Oklahomans are employed in aerospace and defense. “Unfortunately, Oklahoma does not rank highly compared with other states across the U.S.,” Hamilton says. “But that may soon change. The current administration has made this a priority and is taking measures to improve the statewide education system in Oklahoma.”
The state also has faced a “brain drain” of college graduates in recent years, according to the Oklahoma Economist, a publication of the Federal Reserve Bank of Kansas City.The first-quarter 2019 edition of the report indicated that net domestic migration to Oklahoma was negative in each of the past three years, marking the state’s slowest population growth since 1990. Residents with bachelor’s degrees or higher accounted for virtually all of those leaving the state. Overall, educational attainment has grown in the state, but the pace of that growth has lagged the rest of the nation, according to the report.
Gov. Stitt says Oklahoma is attempting a “targeted approach to moving the needle” in areas where it needs to improve: “In areas such as innovation, education, infrastructure, and government efficiency, we are working with stakeholders statewide to identify weak points and determine a plan of action to move Oklahoma forward,” he notes.
The Governor believes a critical challenge for Oklahoma’s economic development future is “our brand, or lack thereof.” He believes the perception of the state does not always equal reality and he is hoping to change that.
“Oklahoma has an impressive value proposition for companies, but too many people — businesses, investors, and skilled workers — have a bad opinion or no opinion of our great state,” Stitt says. “If we don’t define who we are, other people will. Oklahoma deserves to be among the top choices for every company considering an expansion or relocation. We are working on a statewide rebranding effort to help us put our best foot forward.”
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