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Texas Today: Where Businesses Succeed

The state of Texas continues to gain accolades for its pro-business environment, which is sustained by its skilled workforce, low taxes, favorable regulatory environment, and deal-closing funds among other attributes.

Q2 2018
It’s certainly not every day that a state gets an opportunity to attract a $10 billion economic development investment, and many states aren’t really prepared to respond to such a massive possibility. The proposed ExxonMobil-SABIC Gulf Coast Ventures deal, however, was right up Texas’ alley. Certainly, Texas has plenty of experience in petrochemicals, but it also has the wherewithal to make big deals happen — and it did about a year ago.

The Gulf Coast Ventures project, a joint venture between ExxonMobil and Saudi Arabia-based SABIC, is to include the largest ethane cracker in the world. It’s in the works near Corpus Christi and could be completed as early as 2021. It promises as many as 6,000 construction jobs plus permanent work for 600, along with some 3,500 indirect or induced jobs once it’s up and running. According to a company news release, “The project will create value not only for both of our companies, but for the surrounding communities through the creation of jobs and economic growth,” said John Verity, who heads ExxonMobil Chemical Co.

Making this kind of big thing happen requires piecing together countless puzzle pieces and facilitating the collaboration of many different parties. It’s everything from navigating the environmental permitting process to negotiating tax breaks from local schools to arranging state incentives such as grants from the Texas Enterprise Fund, and a whole lot more. Texas keeps moving the ball forward on these and numerous other fronts.

Wins of Many Kinds
Texas, of course, has a long history in petrochemicals and a famous reputation for taking on the world in a supersized way. That’s why it’s important to observe that the state’s economic development successes include wins of all sizes, not just massive-scale projects such as the Gulf Coast Ventures deal. Even more important, they go far beyond such sectors as energy. Booming industries in the Lone Star State also include advanced manufacturing, aerospace, life sciences, and information/computer technology, to name a few.

For example, the “T” in Texas could just as easily stand for technology. On a recent trip by Gov. Greg Abbott to India, he dropped by Wipro’s Electronic City facility in Bengaluru and took part in that company’s announcement of a new Texas Technology Center in Plano. Wipro already has invested in Dallas and Houston in a big way, with some 1,400 people on the payroll. The Plano facility will be the company’s U.S. cybersecurity center and advanced analytics hub, with 150 jobs at first and more in the future. Wipro eventually plans to employ 2,000 or more Texans in total. In making the latest announcement, Abidali Z. Neemuchwala, Wipro Limited CEO and executive director, said the technology center is “testament to the local talent pool and the robust support offered by the state to the technology sector.”

The steel manufacturing sector also was a topic of interest during that same India trip. The Governor and his team secured a memorandum of cooperation from JSW Group in Mumbai, outlining an expansion of the company’s JSW Steel (USA) Inc. operations in Baytown. The company suggested it could invest up to half a billion dollars there, the first $150 million of which is earmarked for a retrofit of the existing steel plate mill. A $3.4 million Texas Enterprise Fund grant helped pave the way for the company’s commitment, and “access to natural gas at extremely economical prices and the abundant availability of scrap steel in Texas make conditions very conducive for manufacturing through the electric arc furnace route,” according to the company’s Parth Jindal.

Here are just a few more recent examples of the diversity of the Lone Star State’s economic development successes:

Texas Keeps Landing New and Expanded Facilities

Texas’ economic development successes include wins of all sizes in varied industrial sectors including energy, technology/electronics, food, professional services, and more.
  1. ExxonMobil-SABIC Gulf Coast Ventures

    San Patricio County, TX

    The Gulf Coast Ventures project, a joint venture between ExxonMobil and Saudi Arabia-based SABIC, which is to include the largest ethane cracker in the world, is in the works near Corpus Christi and promises as many as 6,000 construction jobs plus permanent work for 600, along with some 3,500 indirect or induced jobs.

  2. Wipro’s Electronic City Texas Technology Center

    Plano, TX

    Wipro’s new Texas Technology Center in Plano will be the company’s U.S. cybersecurity center and advanced analytics hub, with 150 jobs at first and more in the future.

  3. JSW Steel (USA) Inc.

    Baytown , TX

    JSW Group, based in Mumbai, India, plans an expansion of its JSW Steel (USA) Inc. operations in Baytown. The company suggested it could invest up to half a billion dollars there, the first $150 million of which is earmarked for a retrofit of the existing steel plate mill.

  4. Golden State Foods Corp.

    Burleson, TX

    Late last year, Golden State Foods Corp. announced plans for a $70 million manufacturing and distribution facility serving its Liquid Products Division in the Texas community of Burleson, which will create some 150 jobs.

  5. JSW Steel (USA) Inc.

    Gartner Inc.

    Gartner Inc. plans to invest $12 million to expand in the North Texas community of Irving, where it will add 800 tech jobs.

  6. Ernst & Young

    San Antonio, TX

    In November 2017, the global professional services firm of Ernst & Young announced its newest client services delivery center in San Antonio, representing about $10 million in capital and 600 new jobs.

Earning Recognition
With headlines such as those outlined above, no wonder the state keeps finding itself at or near the top of business rankings, pretty much year after year. Last year, for example, the state exported goods worth $264 billion to places all over the globe, led by Mexico, Canada, China, Brazil, and Korea. That made it America’s top exporter, but that distinction is nothing new — it’s been that way for 16 years in a row. Meanwhile, for 14 years in a row, Chief Executive has named Texas the “Best State for Business.”

Forbes chimed in recently with new distinctions, ranking Texas communities at the top of its “Best Cities for Jobs 2018.” The South as a whole is on the rise, the magazine reported, with the Dallas and Austin areas leading the way. The magazine reported that Dallas logged double-digit percentage job growth in just about every sector measured, “from information to construction, energy, finance, and professional and business services.” It summed up the Dallas metro area by calling it “a great value proposition, with affordable housing, a favorable regulatory climate, low taxes, and an increasing array of cultural amenities beyond the Dallas Cowboys.”

The Forbes study observed that while most people recognize Austin as a technology capital, its job growth is a whole lot more diverse than one might expect. Professional and business services are especially strong there, according to Forbes, adding that population growth has been stellar: “The metro area last year had the strongest population increase and rate of domestic in-migration of any in the country with a population over a million.”

Attracting Business
Economic development incentives are, of course, central to a lot of big deals. The companies that choose to expand in Texas are often pretty vocal about their appreciation for the assistance they receive. The Texas Enterprise Fund, in particular, is widely regarded as one of the nation’s most impactful deal-closing programs. Created in 2003, it’s an option for companies thinking of locating or expanding in Texas that also have at least one viable location option in another state. The project must promise at least 75 new jobs (or 25 if it’s in a rural area), with pay that’s at or above the local average. Through the years, the fund has supported roughly 150 projects and awarded well over $600 million in grants that have helped create more than 84,000 jobs.

That’s just the start (or because it’s a deal-closing fund, maybe it’s more accurate to call it the finish). Other popular programs include the Texas Enterprise Zone Program, which offers refunds on the state sales and use tax to qualified projects, and the Skills Development Fund, which helps with workforce competitiveness.

Beyond incentives, the tax climate in Texas has helped the state win business. To begin with, there’s no corporate or personal income tax. And although there’s a sales tax, there are generous exemptions for a lot of different business functions, from manufacturing machinery and R&D materials to software and equipment. The franchise tax was cut significantly a few years ago, and there are exemptions for which some businesses may qualify.

The state has in recent years also tackled another area of interest to business — the legal climate. In particular, a series of tort reforms have helped companies reduce their insurance premiums and save their funds for growing the business. Reforms aimed at healthcare liabilities, meanwhile, have attracted more physicians to Texas, which has a positive quality-of-life impact.

The Workforce & Quality of Life
Texas has also earned positive attention for its skilled workforce and overall quality of life.

For starters, the Texas workforce is big. At more than 13 million workers, it’s the nation’s second-largest collection of civilian workers. There are exceptional resources for ensuring that those workers bring with them the required skills to get the job done. There are more than three dozen public universities and upper-division centers plus 50 community college districts, and many of the institutions land near the top of the educational rankings. For companies with specific training needs, the Skills Development Fund supports customized workforce training.

Texas universities are home to a highly regarded population of researchers, and the state is working to boost that resource, too. The Governor’s University Research Initiative, launched a couple of years ago, is a matching grant program intended to help the state’s institutions attract the world’s best researchers.

The state, meanwhile, has identified a need to increase the percentage of its residents that earn college degrees. It’s a significant issue in many states and requires some lofty and out-of-the-box thinking to make a difference. The Texas response, launched in 2015, is called 60x30TX, named for its target of ensuring that by 2030 at least 60 percent of the population ages 25 to 34 hold a postsecondary certificate or degree.

And quality of life is much more than just icing on the cake when it comes to boosting businesses and prosperity in Texas. The state is known for both vibrant cities and friendly rural lifestyles, with more than 600 miles of coastline and more than 90 state parks. Sports fans cheer on multiple pro teams and college powerhouses.

Adding to the lifestyle picture is healthy diversity, as Texas is one of the nation’s more racially and ethnically diverse places. More than 160 languages can be heard there, and a third of the state’s population speaks something other than English at home.

What you find a lot less of in Texas are costs. The high quality of life doesn’t carry a high price tag. Technology companies, in particular, notice the difference when they’re comparing options between Texas and Silicon Valley. Taxes are low in Texas, and affordable housing is within reach.

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