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BUSINESS REPORT: Texas – Innovation Moves Front And Center In Austin

Technology shares the spotlight with music and film at the annual South by Southwest festival in Austin, TX.

By Jenny Vickers
From the March/April 2013 issue

Technology innovation is happening across the country, but there is no better place to witness the revolution other than Austin, TX, home to a rapidly expanding technology industry.

Every year, tens of thousands of people descend on the city for South by Southwest (SXSW), a nine-day stretch of festivals and conferences designed to highlight the hottest new entrants in the world of music, film and technology. Collectively, SXSW is the highest revenue-producing event for the Austin economy, with an estimated economic impact of $167 million in 2011. It has also grown very rapidly over the years—700 participants attended its first event in 1987 and over 30,000 attended this year (up 25 percent from 2012).

The interactive portion of the event focuses on technology and is a breeding ground for new ideas and creative technologies. Foursquare launched there in 2009 and now has 20 million users. This year, BF was on hand at the event to find out more about it. We attended several events hosted by the Austin Chamber of Commerce and caught up with several new innovative tech companies.

TEXAS FAST FACTS

  • Population (2011 Est.): 25,674,681
  • Largest Cities (2011): Houston, 2,145,146; San Antonio, 1,359,758; Dallas, 1,223,229; Austin, 820,611; Fort Worth, 758,738
  • Targeted Industries: IT & Computer Tech, Energy, Petroleum Refining & Chemical Products, Advanced Tech & Manufacturing, Aerospace & Defense
  • Key Incentives: Emerging Technology Fund, Enterprise Zones, Skills Development Fund, Renewable Energy Incentives, TX Industry Development Loan Program
  • GDP (All Industry 2011): $1.3 trillion*

*Bureau of Economic Analysis, U.S. Department of Commerce

Launch Pad For New Tech

“SXSW is a great launching point for new technologies,” said Susan Davenport, Senior Vice President of Global Technology Initiatives at the Chamber who is the lead of all things SXSW tech. “It’s really a huge innovation opportunity to get your new ideas out there and into the mainstream.”

Austin-based medical device company Spot On Sciences, Inc. attended SXSW to pitch its newest device, Hemaspot™, which helped the company become a finalist in the SXSW Interactive Accelerator for innovative health technology.

“Our device allows anyone to take a blood sample in any location at any time and ship or store the samples at room temperature,” said Dr. Jeanette Hill, CEO of Spot On Sciences.

The company is only three years old and has been on the market for three months, yet it has already gained a lot of traction in international markets. The device is now being used in remote locations in Africa for HIV testing and in Scotland for diabetes research.

“For centuries, you had to go into a blood testing facility and it’s a really big barrier for people who are the sickest, homebound and the elderly, as well as people who live in remote locations,” said Dr. Hill. “With this device you can take the test from home or any location. You don’t need a lab, centrifuge, or to ship it cold. You can take a sample then mail it to the lab.”

For its groundbreaking work, the company received a $1 million Small Business Innovation Research award from the Defense Advanced Research Projects Agency (DARPA) in July 2012.

“DARPA did the initial work to develop the Internet, GPS system, and rockets,” said Dr. Hill. “They think big. So they are funding us because they see our device as a way to really change the way we do health care. We really want to revolutionize clinical science.”

The device is based on dried blood spot (DBS) technology, which is best known for newborn screening and has many additional commercial uses for clinical trials, bio-banking, population studies and a wide range of medical research.

Digital technology startup UMeTime is changing the way businesses are connecting with new customers. They have built a platform that gives local business the ability to control and offer deals at their convenience. Whether you are a business that needs to speed up your slow hours, fill your empty chairs and tables, or sell sitting inventory, UMeTime offers merchants the capability to overcome these barriers and drive sales and revenue.

The company has officially launched its mobile application and is available now on iTunes or Google Play.

“Unlike Groupon and Living Social, UMeTime functions on a hyperlocal level,” said UMeTime co-founder Brett Berman. “The app allows locals to see what’s happening around them in real time, from local businesses that they like. Customers can use it for free on their mobile device.”

UMeTime moved from L.A. to Austin three months ago to take advantage of its bustling tech scene and lower taxes.

“Austin is a very collaborative environment, from the Chamber to the government to the capital factor, startups want to support each other here,” said Berman.

Since launching in Austin just three years ago, local start-up Tabbed Out has grown from a few bars and restaurants in downtown Austin to 1,000 locations nationwide. It has developed an app that lets customers pay their tabs with their phone.

“We not only made the app, but also the software that goes on the point of sale,” said Meredith Schultz, managing marketer at Tabbed Out. “We are the only company targeted for hospitality—bars and restaurants. Our app solves the pain of tipping and splitting the tab, as well as provides the ability for customers to provide feedback to the bar or restaurants.”

Tabbed Out now has a partnership with T.G.I. Fridays and is expanding to other cities including Seattle, San Francisco, Portland, Denver, DC, Dallas and Houston. The company is located in downtown Austin close to the famous 6th street, a popular location of bars and restaurants. “Austin is very friendly for start-ups and emerging technology companies,” said Schultz. “In L.A. it’s more competitive, but in Austin everyone is friendly and there to support you especially when you are starting a new business.”

We also caught up with Firefly LED Lighting’s founder and CEO Steve Barcik Amstel, who is stepping into a new role with Convergence Wireless, a wireless networking technology company that has produced the first all wireless lighting control system for buildings.

“Whereas now there is no easy way to do an energy management system without pulling a lot of wire, our product will allow you to install an energy management and information management system and even cellular, just by adding our device to light fixtures,” said Amstel.

After Firefly LED Lighting was acquired by a larger lighter company, Austin-based Convergence Wireless seemed a perfect next step for Amstel, who has lived in Austin for 27 years and started out as a facilities engineer at Texas Instruments. Amstel founded Firefly in 2009 and won the GM technology award for his work in developing long life and high efficiency LED lighting.

“I’ve always had an interest in energy management and facilities management and how can we use new things like Internet and sensing and bigger computer power to make a difference,” said Amstel. “There is so much opportunity to reduce our country’s energy demand and to save money for facilities through these technologies that I keep getting involved in it because I get excited about what we’re going to be able to do.”

Convergence Wireless is part of the Austin Technology Incubator, which helps breakthrough a number of clean energy and energy efficiency companies each year and has led Austin to being dubbed the “Clean Energy Capital of the U.S.”

“When you look at the number of startups in Austin around clean energy and environmental considerations it’s really taken off as a clean energy mecca for start-up companies,” said Amstel.

Amazon Puts Three New Warehouses In Texas

Amazon has announced plans to open three new fulfillment centers in the state of Texas, creating more than 1,000 jobs. The sites, which will use advanced technology to help fulfill customer orders, will be located in the cities of Coppell, Haslet and Schertz.

“We look forward to putting more than 1,000 Texans to work at our new fulfillment centers in Schertz, Coppell and Haslet,” said Mike Roth, Amazon’s vice president of North American fulfillment. “We appreciate the state and local elected officials who have helped us make this exciting investment in the state of Texas.”

“We’re pleased Amazon is investing in Texas by bringing three fulfillment centers and more than 1,000 jobs to our state,” said Texas Comptroller Susan Combs. “I thank Amazon for working with us—making it possible to bring new jobs and revenue to the state of Texas.”

“This is the biggest economic development partnership announcement in the history of our city,” said city of Haslet Mayor Bob Golden. “The jobs and potential tax base that this development will bring to our community is a major milestone in our city’s growth.”

The 1.2 million-square-foot site in Schertz and the 1 million-square-foot site in Coppell will handle larger items—anything from televisions to bbqs, for example. The 1.1 million-square-foot site in Haslet will handle smaller items like books, small electronics or DVDs, to name a few.

“Amazon, coming to Coppell, complements our strategy of building a quality business base that supports the community and the region,” said Coppell Mayor Karen Hunt. “We are thrilled Amazon chose Coppell for a new fulfillment center. We recognize their large capital investment and new jobs brought to this area.”

Recently, Amazon committed to hire more than a thousand veterans in the U.S. in the upcoming year to join the hundreds of veteran employees it has on staff currently. The Department of Veterans Affairs estimates there are more than 1.6 million veterans in the state of Texas.

“We are thrilled to welcome Amazon to Schertz,” said city of Schertz Mayor Michael Carpenter. “The investment Amazon is making in our community is significant, and it is a manifest expression by yet another highly successful and well-respected company that Schertz is a great place to do business.”

USAA Real Estate Company is building the project in Schertz. Hillwood Development Company is building the project in the city of Haslet as part of AllianceTexas, a 17,000-acre, master-planned community, and is also constructing the project in the city of Coppell.

Pipe Mill Coming To Bay City

Tenaris has announced it will build its first U.S. seamless pipe mill in Bay City, Matagorda County, TX. With its proximity to Houston and to Tenaris’ North American headquarters, the location offers a combination of favorable geography, operational logistics and availability of a skilled workforce.

“Our new facility will complement our integrated global manufacturing network and work closely with our existing North American operations to further strengthen domestic production,” Paolo Rocca, Chairman and CEO, said.

Texas Gov. Rick Perry (with hard hat) and Tenaris President, North America, German Cura at a recent press conference announcing Bay City as the location of Tebaris’ first U.S seamless mill.

“This announcement is only possible, thanks to the hard work of state and local officials, as well as, the area business community, which always plays a major role in decisions like this,” Gov. Rick Perry said. “The most profound statement about our favorable economic climate comes when companies like Tenaris make an investment of this size in our state.”

“With this investment, we will strengthen our local production and service capabilities to address the growing demands of the energy industry,” German Cura, President, North America, said. “We are grateful for the support we have had from The State of Texas, Matagorda County and Bay City.”

An analysis conducted on the economic impact of Tenaris in Matagorda County states the company will have a large direct and indirect influence on the area. The new plant will generate 600 direct manufacturing jobs and offer substantial economic impact in Matagorda County as well as in the surrounding areas.

“The company’s commitment to the environment and safety is a top priority,” Cura said. “The facility is being designed according to the most stringent environmental and safety standards, with the implementation of control technologies that will reduce our emissions footprint and exceed state and federal regulations.” The new facility is expected to begin operations in 2016.

The growing biotech sector the Lone Star State recently got a shot in the arm from a federal initiative to expand domestic manufacturing of flu vaccines. [See related coverage of Texas biotechnology activities here.]

GlaxoSmithKline plc (GSK) and Texas A&M University System announced that the U.S. Department of Health and Human Services (DHHS) has approved the establishment of a $91 million influenza-vaccines manufacturing facility as the anchor of the Center for Innovation in Advanced Development and Manufacturing (CIADM) in Bryan-College Station, TX.

“The Texas A&M Center, anchored by this facility, is expected to bring more than $41 billion in expenditures within the State of Texas over the next 25 years, and will add more than 6,800 direct and related jobs to Texas,” Gov. Rick Perry said.

“GSK is privileged to deepen our commitment to U.S. public health, as part of this unprecedented public-private collaboration to protect against pandemics and bio-threats,” noted Antoon Loomans, senior vice president, GSK Vaccines. “In Texas A&M, we have found a partner with a rich tradition of service and with pioneering technologies that will benefit the entire pharmaceutical industry in making vaccines available and accessible to all in need.”

The Texas A&M Center for Innovation is headed by Dr. Brett Giroir, vice chancellor for Strategic Initiatives at the Texas A&M System, and a core team of A&M experts in biotechnology, infectious diseases, facilities planning and construction, federal acquisitions/contracting, and government affairs. The partnership with GSK was founded on a long, collaborative relationship between Texas A&M and the Wallonia Region of Belgium, with specific planning for this project beginning in the spring of 2010.

Once constructed and operational, the Center’s influenza manufacturing facility will be able to supply 50 million doses of pandemic influenza vaccine within four months of an outbreak.

“GSK’s decision to partner with Texas A&M and bring their vaccine manufacturing to our state is a testament to the investments that the A&M System and the State of Texas have made in the people, infrastructure and technologies, much of which came from critical state programs such as the Emerging Technology Fund,” Giroir said.” GSK brings unequaled influenza vaccine development, manufacturing, and regulatory expertise to our Center.”

Hitting The Sweet Spot In Sugar Land, TX

The City of Sugar Land, TX has combined a great quality of life, a growing constellation of cultural attractions and a business-friendly climate that should prove attractive to companies looking for prime locations for their facilities and tourists looking for an interesting and entertaining destination.

FORTUNE 500 FIRMS FLOCK TO SUGAR LAND

  • Costco Wholesale Corporation operates 592 clubs in 9 countries with 92,000 employees.
  • Fluor Corporation is the largest U.S.-based, publicly traded engineering, procurement, construction and maintenance services firm.
  • OptumRx is a division of United Health Group, a company that provides pharmacy benefits management.
  • Schlumberger is a supplier of technology, integrated project management and information to customers working in the oil and gas industries.
  • Texas Instruments, Inc. serves the world’s most innovative electronics companies with analog and digital semiconductor design.

The focal point of Sugar Land’s push to become a destination of choice is the redevelopment of the Imperial Sugar refinery and adjacent Tract 3 property. Last year, Constellation Field, became the first project to open within the Imperial Development. This a gem of a ballpark, already becoming the go-to place for year-round entertainment, embraces the three goals of the redevelopment: historic preservation of key buildings; continued aesthetic/architectural quality; and economic development that creates successful and vibrant community projects.

The Sugar Land Skeeters’ inaugural minor league baseball season at Constellation Field last year set an Atlantic League attendance record of 465,511. When compared to minor league teams affiliated with Major League Baseball, Sugar Land ranked third in Texas behind the Triple A Round Rock Express and Double A Frisco Roughriders. In a national comparison of all professional minor league baseball teams, both affiliated and independent, Sugar Land’s average game attendance was in the top 25, with 6,751 guests per game. Constellation Field was chosen via fan vote for Baseball America’s 2013 Great Parks Calendar, the Skeeters organization was named a runner–up for Baseball Digest ‘s 2012 Organization of the Year and the new stadium was selected to host the Southland Conference Baseball Tournament, scheduled to take place in May.

Constellation Field serves as a year–round venue for community events, such as concerts and sports tournaments. It has a variety of dynamic settings, accommodating intimate catered events to large–scale stadium seating of up to 5,000 for on–field events. The stadium offered a variety of indoor and outdoor meeting and party rooms for businesses, weddings or other events. The stadium’s first two concert events were performances by REO Speedwagon and ZZ Top.

Design has begun on planned indoor Performing Arts Center that is planned for a 21-acre site near the intersection of U.S. Highway 59 and University Boulevard, with a letter of intent with ACE SL, LLC was approved in August by the Sugar Land Development Corp. The City intends to create a financially feasible, operationally self–sustainable signature facility that will promote economic development, create jobs and enhance educational offerings.

To help give ACE input on the facility’s amenities, appearance and function, two planning sessions were held in the fall with team members from ACE, the architects and the City. The schematic designs are expected to be completed and ready to share with the community this spring. No timeline has been set for completion of the project. The venue will be located in Telfair within a larger mixed–use development that includes the future campuses of Fluor Enterprises, Inc. and Texas Instruments, Inc., and other proposed uses, such as a hotel and restaurant.

Sugar Land Town Square is a 32–acre, award–winning, mixed–use, public–private development. It is now fully developed and contains upscale retail and restaurants, Class A offices, a hotel and conference center, residential condominiums and City Hall. Retailers that opened in Town Square in fiscal year 2012 included Sur la Table, Gem and Bead Gallery, Pinot’s Palette, Brilliant Sky Toys and Books and Revolution Studio. New restaurants included Ruggles Green, Guru Burgers & Crepes and BLU.

The 1.3–acre plaza hosted 200 free events in fiscal year 2012 attended by nearly 100,000 people. Events included Fitness in the Plaza, Halloween Town, Christmas Tree Lighting and the New Year’s Eve event, as well as art and fashion shows, international festivals and awareness campaigns.

At the Houston Museum of Natural Science in Sugar Land, the Hall of Paleontology has been expanded and is now twice its original size. Arranged in chronological order, it features a triceratops and many exquisite fossils from the Paleozoic era, as well as a large collection of trilobites, extinct arthropods, Stenopterygius, Holzmaden and a sea crocodile. A new, saltwater aquarium includes a wide variety of fishes and aquatic life.

Sugar Land’s stable local economy is a magnet for relocating and expanding firms. In fiscal year 2012, significant relocations were announced, including several Fortune 500 firms that operate internationally and other national and local firms. These combined projects will result in more than $221 million in new capital investment, 1000 new jobs, 2,000 retained jobs and more than 423,000 square feet of newly constructed or leased space.

Several key planned development applications were approved by the Planning and Zoning Commission and City Council during 2012, including the Imperial/Tract 3 and Telfair developments. The City Council approved the Imperial General Land Plan Amendment 1 and zoning applications for 690–acres (the majority of the development in Imperial was Constellation Field and the associated street construction). Several key projects continue within the Telfair commercial area near U.S. Highway 59, including a Costco store, the future office campus for Texas Instruments and Fluor and planning for the performing arts center.

At the end of fiscal year 2012, Sugar Land had more than 23 million square feet of commercial space; this included 7.5 million square feet of office space, 7.6 million square feet of retail space and 8.2 million square feet of industrial space.

The Sugar Land Development Corporation and Sugar Land 4B Corporation (SL4B) each collect a quarter cent sales tax that directly funds economic development programs and City activities. The focus of SLDC is business recruitment and retention initiatives, while SL4B focuses more on quality–of–life initiatives and strategic development projects.

Propane Mega-Plant Fuels Job Growth In Alvin, TX

Gov. Rick Perry recently announced that Ascend Performance Materials Texas Inc. will construct a new propane dehydrogenation facility in Alvin, Texas, creating 100 jobs and $1.2 billion in capital investment. The state is providing $1 million through the Texas Enterprise Fund to close the deal on this expansion and job creation. Execution of the state’s agreement is contingent upon finalization of a local incentive package.

“Through our combination of low taxes, predictable regulations, fair courts, skilled workforce and competitive incentives like the TEF, Texas is a national model for creating jobs and prosperity,” Gov. Perry said. “Ascend’s new facility in Brazoria County, with more than a billion dollars worth of capital investment and the creation of 100 new jobs, further strengthens the Gulf Coast’s economy and chemical production industry.”

Ascend is a global leader in proprietary technologies central to the production of chemicals, and Nylon 6,6 plastics and fibers. Nylon 6,6 is the material of choice for high performance applications in the engineering plastics and fibers industries globally, and can be found in thousands of commercial and industrial products such as apparel, automotive, building and industrial, chemicals, consumer goods, electronic and military industries. The company has five manufacturing facilities in the U.S., which allow it to develop new products from its core technologies, and provides flexibility to respond to the expanding needs of its customers. The new facility in Alvin will focus on propane dehydrogenation, a method of producing propylene, which is common chemical building block for plastic and synthetic fiber products.

“This project builds on the existing strength of the Ascend position as a global leader in the chemicals and nylon businesses. The active support of the governor’s office, as well as that of state and local authorities, has contributed to our progress in the early stages of the development of the project,” said Tim Strehl, Ascend president.

“Ascend picked the right place to expand their business,” State Sen. Larry Taylor said. “The talented workforce in Senate District 11 and the State of Texas can provide the perfect partners for innovative companies looking to succeed.”

The Ascend project is just the latest of several major projects that have come to fruition in Texas as the oil and gas giant continues to flex its energy muscles. Gov. Perry announced last year that Dow Chemical Co. will create 150 new jobs and $1.7 billion in capital investment with the location of a hydrocarbon cracker in Brazoria County. The governor was joined at the announcement by Lt. Gov. David Dewhurst, Dow CEO and Chairman Andrew Liveris and lawmakers; Perry committed the state to investing $1 million through the Texas Enterprise Fund (TEF) to close the deal on this project.

“When it comes to attracting jobs, the Texas Enterprise Fund may help close the deal and provide the final piece of the puzzle, but it’s Texas’ growing reputation as the country’s best place to build your business that puts us in the running in the first place,” Gov. Perry said. “This announcement is great news for Texas, and even better news for the people who will eventually work at this new facility thanks to this TEF investment.”

Dow Chemical Co. is a worldwide manufacturer and supplier of products that go into businesses such as specialty chemicals, electronics, agrosciences and plastics. The new ethylene cracker in Brazoria County will processes natural gas and natural gas liquids to create ethylene, to produce plastic resins and other chemical intermediates that are used to manufacture a variety of materials including transportation, building and construction, infrastructure, wire and cable, medical devices, personal care and food packaging. This will be Dow’s largest ethylene cracker worldwide, and will use U.S. produced shale gas and natural gas liquids.

“Dow is proud to be making a significant investment in Texas with the construction of a new world-scale ethylene production plant—a key part of our comprehensive plan to further connect our U.S. operations with cost-advantaged feedstocks available from increasing supplies of U.S. shale gas,” Dow Chemical Company chairman and CEO Andrew Liveris said. “We received a lot of support from our local community and from this business-friendly state via the Texas Enterprise Fund, and are proud to expand upon our longstanding history of investing in Texas.”

The Legislature created the TEF in 2003 and has re-appropriated funding in every legislative session since then to help ensure the growth of Texas businesses and create more jobs throughout the state. TEF projects must be approved by the governor, lieutenant governor and speaker of the House. The fund has since become one of the state’s most competitive tools to recruit and bolster business. To date, the TEF has invested more than $498.8 million and closed the deal on projects generating more than 67,400 new jobs and more than $19.9 billion in capital investment in the state.

Gov. Perry has made diversifying the energy mix of Texas’ electricity market one of his major priorities, helping to lower electricity prices. In 2012, Texas relied on a variety of fuel sources to meet the growing demand for electricity, including 34 percent of energy produced coming from coal, 45 percent from natural gas, 12 percent from nuclear, 9 percent from wind, and 0.5 percent from other sources such as hydro, biomass, landfill gas, and solar.

In 2007, Gov. Perry signed comprehensive energy efficiency legislation, House Bill 3693, into law. This legislation created incentives to reduce energy costs through investing in energy efficiency technologies. As a result, Texans reduced electric consumption in 2009 alone in the state by 506,000 megawatt hours. In 2011, Perry signed Senate Bill (S.B.) 1125 increasing the energy efficiency goals, including cost caps for those programs to ensure the costs remain reasonable for customers, and allowing consumers to participate in the generation market through demand-management.

SUGAR LAND’S REGIONAL AIR HUB

  • Sugar Land Regional Airport was designated a “National General Aviation” airport, one of 84 in the country and one of only eight in Texas. The FAA designation emphasizes SLRA’s importance within the overall aviation system.
  • Café Select, the new airport-managed coffee shop, opened for business on March 5.
  • Anson Air began construction of a new $3-million general aviation flight training facility.
  • On Jan. 19, a ribbon cutting was held at the Taxilane Juliett site, a project that accommodates aviation departments interested in relocating to Sugar Land. An FAA grant, administered by the Texas Department of Transportation Aviation Division, funded 90 percent of the $7.8 million project. Taxilane Juliett includes 10 acres of 16-inch-thick concrete taxilane and provides seven leasable sites for corporate hangars.

 

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