Texas: Star of the Sun Belt
Rebounding strong from the national downturn, Texas stands out as a place of economic opportunity with many of its cities emerging as growth leaders in the Sun Belt.
Stretching across the South and Southwest of the U.S., the Sun Belt is known, not only for its warmer (and sometimes subtropical) climates, but also as an important economic and political region that has experienced unparalleled growth. Since the 1970s, the region has developed highly successful military, aerospace, defense, oil, and, more recently, high tech and new economy industries. Today, more than a third of all Fortune 500 companies are based in the belt with Texas and California among the top three states in the nation (New York is number two).
Unlike some Sun Belt communities hit hard by the recent recession and foreclosure crisis, business in Texas is booming. According to the latest “Metro Monitor” published by the Brookings Institution, which tracks how the 100 largest metro areas in the country are emerging from the recession, the Lone Star state’s major metro areas—Austin, Dallas/Ft. Worth, Houston and San Antonio—have emerged as growth leaders. According to the report, Texas has fared so well due to its fiscally stable government and highly diversified economy which includes oil and high tech.
According to the July 1, 2009 U.S. Census estimates, 4 of the 10 fastest-growing and 11 of the top 25 cities that have populations above 100,000 are in Texas. According to recent U.S. Department of Labor (DOL) Bureau of Labor Statistics (BLS) estimates, Texas’ employers added 75,200 jobs alone in May, a clear indication of a job market that has continued to grow in an economic downturn.
In high-tech hub and state capital Austin, newly located projects have added 2,145 new jobs in the metro in just the first six months of 2010, four times the number created in all of 2009. The biggest recent expansion for Austin happened in June, when Samsung Austin Semiconductor LLC announced plans to expand the capacity of its 12-inch semiconductor fabrication plant in Austin with a $3.6 billion investment.
The expanded fabrication plant, Samsung’s only semiconductor manufacturing plant located outside of Korea and one of the largest in the U.S., will produce advanced logic devices for Samsung’s System LSI business.
Samsung started in Austin in 1996, when it began construction of its first plant. In total, Samsung has invested about $5.6 billion in the Austin location—by far the largest foreign investment in Texas and one of the largest single foreign investments in the U.S. The new investment will bring the total Samsung investment in Austin to more than $9 billion.
Employment at the Austin site is expected to grow from 1,000 employees to about 1,500 by 2011. The annual payroll in Austin will grow from its current $70 million to about $105 million.
In March, the company established Samsung Austin Semiconductor Research Center (SARC), which will concentrate on the design of Large Scale Integrated circuits, but is not part of the LSI manufacturing line. SARC will employ about 50 researchers by the end of 2010.
“This investment, along with the creation of Samsung Austin Semiconductor’s first research and development entity this spring, makes the Austin campus a true semiconductor complex and ensures Austin’s premier status as a center for semiconductor research and manufacturing,” said Dr. W. S. Han, president of Samsung Austin Semiconductor.
Just 16 miles northeast of Austin another big announcement happened when National Scooter Company Inc. announced the relocation of its global headquarters to Pflugerville. The company, which designs, develops, manufactures, sells and distributes a multi-line of bikes, scooters, motorcycles and electric cars, is expected to bring more than 100 jobs to Pflugerville within three years.
The president and CEO of National Scooter Company, Greg James, said nine cities in Texas and one in Washington were considered for the business’ new location. According to James, the ‘ace in the hole for Pflugerville’ was the city’s ability to offer Triple Freeport exemption, which gives businesses who assemble, process, manufacture or store certain goods an exemption from paying county, school district and city taxes if the goods are shipped out of the state within 175 days.
Austin isn’t the only area of Texas to see growth—major investments and expansions are occurring throughout Texas. A few of these include:
• Medtronic is opening a new $24 million medical technology operation in San Antonio, creating 1,400 jobs. Its operation
will focus on diabetes-related technology.
• Farouk Systems is investing $26 million to expand its beauty products facility in Houston, adding 1,200 jobs.
• Nationwide Mutual Insurance is investing $97.8 million to expand in San Antonio.
Winds of Prosperity
Over the past decade, clean energy has taken on new importance as a social and economic priority. The industry cluster has already experienced considerable growth, particularly in the area of wind power. According to a May 2010 study by The Perryman Group (TPG), an economic and financial analysis firm, the U.S. now leads the world in wind capacity.
The study says that Texas has been the site of much of the new development and now surpasses all other states in terms of total wind capacity. These investments have led to a notable stimulus to business activity. According to the TPG study, the total impact of construction of wind capacity prior to recent initiatives include $26.1 billion in total spending, $12.6 billion in output and almost 160,000 full-time equivalent jobs (during the build-out period).
The report also says that ongoing operations of these facilities will lead to gains of $1.6 billion in annual total spending, $530.9 million in output each year, and 3,876 permanent jobs. When current manufacturing and related activity is included, the total effects rise to almost 10,000 jobs.
One initiative that is helping Texas keep pace with the expansion of wind generation is the Competitive Renewable Energy Zones (CREZ). This initiative allows the transmission of power from wind-intensive regions of the state to population centers with growing needs for power.
As a result of this initiative and growth in this initiative, wind-related manufacturing businesses are already beginning to locate in Texas, along with other related maintenance operations and associated firms. The site of most of this development is happening in West Texas, which is now home to seven of the world’s 10 largest wind power projects.
In May, several wind-related business announced expansions in West Texas.
LM Wind Power Service & Logistics announced it is bringing its North American regional service center to Abilene. The center will serve as the southern operations base for the company’s wind turbine blade repair business.
“This is a really important addition to our region,” said Greg Wortham, executive director of the West Texas Energy Consortium. “We’re becoming the North American headquarters for everybody. Within, 500 miles of Abilene you have almost half of the wind power in the country.”
Run Energy finalized a long-term, multiyear contract with an undisclosed energy company to maintain 315 turbines on three wind farms. Run Energy, which moved its headquarters from Houston to Abilene almost two years ago, provides operations and maintenance services, including post and in-warranty inspections of wind turbines.
Broadwind Energy announced a plan to expand its enhanced megawatt (MW) gearbox repair and refurbishment capabilities. For MW-scale wind turbines in North America, gearbox repair and refurbishment have traditionally been performed outside the U.S. by non-domestic sources. According to a Broadwind May 2010 press release, the company says it will be the first independent supplier of wind energy products and services to offer enhanced MW gearbox repair and refurbishment capabilities in North America.
Site selection discussions for Broadwind’s gearbox complex are underway and focus on the Abilene area. Abilene is also the home of Broadwind’s state-of-the-art wind turbine structural tower manufacturing plant, which began production in February 2009.
To further help assist in development of West Texas wind energy industry, Texas Tech University announced in May that it will become the research hub for the newly formed National Institute for Renewable Energy, a wind energy consortium started with the financial help from West Texas organizations such as the Development Corporation of Abilene.
According to Texas Tech, NIRE will be an independent public-private collaboration that will work to solve key scientific and technology challenges facing the wind industry.
According the Perryman Group, the combined impact of construction and development of new power transmission facilities as well as wind turbines required to achieve the newly expanded capacity on business activity in Texas is projected to total $30.6 billion in output and some 383,972 person-years of employment. In addition, this economic activity will lead to notable incremental tax receipts over the development period. TPG estimates the gains to include about $1.6 billion for the State and $329.1 million for various local governments.
Since it was established by Texas Governor Rick Perry and the Texas Legislature in 2003, the Texas Enterprise Fund (TEF) has played a crucial role in attracting new businesses and jobs to the state and assisting with the expansion of existing businesses that might otherwise opt to expand in another state.
As the largest “deal-closing” fund of its kind in the nation, the fund is used only as a final incentive tool where a single Texas site is competing with another viable out-of-state option. Additionally, the TEF is only considered to help close a deal that already has significant local support behind it from a prospective Texas community.
Recently, the TEF was the driving force behind Caterpillar’s decision to relocate its engine assembly, paint and testing operations to Seguin, Texas—a move that will generate more than $176.8 million in capital investment and create more than 1,700 new jobs.
In July, Governor Perry announced that the state is investing $1.125 million through the TEF in Frito-Lay North America (FLNA) for the company-wide implementation of SAP business management software and other IT system upgrades. This investment will create 125 jobs in North Texas and generate more than $50 million in business infrastructure.
To date, the Texas Enterprise Fund has brought more than 52,000 new jobs to the state and generated more than $14.3 billion in capital investment.
WDSGlobal is Bringing Jobs to Wichita Falls
Geographically centered between major markets in North Texas and Oklahoma, Wichita Falls has a population of more than 110,000 and is considered the population center of its region. In February, the Wichita Falls City Council approved up to $3.675 million from the 4(a) sales tax fund to attract WDSGlobal, a third-party, tele-servicing company, to Wichita Falls.
WDSGlobal plans to lease the former Avis/Budget call center facility on Airport Road, initially creating 240 full-time customer service, supervisor, and managerial positions, growing rapidly to 750 employees.
“We are very pleased to be bringing WDSGlobal’s newest operation to Wichita Falls. Wichita Falls was relentless in working with us to make sure we located our operation here instead of the five other communities we considered,” said Gary Leake, the Chief Operating Officer of WDSGlobal. “The incentives offered were key to our decision making process, and we would like to thank the City of Wichita Falls for their investment and partnership with our project.”
WDSGlobal, the wireless industry’s leading provider of specialist support and lifecycle management solutions, has continued its expansion with the opening of a new facility in Wichita Falls. This is the company’s third North American site and adds to a global footprint covering Europe, Africa, Asia and Australasia.
“With some of the most specialist support agents in the industry, we have looked long and hard to find a location for our expansion,” said Leake. “Wichita Falls is a natural fit, offering a skilled base of employees that will perfectly complement our commitment to expertise.”
The Wichita Falls site will house a specialist technical support and care center, offering support on behalf of the company’s wireless carrier and handset manufacturer customers. The site will offer space for up to 750 staff, allowing the company to service the growing requirement across the wireless industry for specialist support services.
QuikTrip Expands to Midlothian
Located in northwest Ellis county just minutes from Dallas, Fort Worth, Arlington, and DFW International Airport, the City of Midlothian is considered one of the fastest growing cities south of the Trinity River. According to the Corporation for the Economic Development of Midlothian (CEDM), Midlothian is planning for future growth with a new comprehensive plan, Envision 2025, which will help to manage the city’s growth in a way that will preserve small town values yet allow for continued community and economic development.
The CEDM recently announced that Midlothian will become a new base of support for a fast growing convenience store chain. On July 2, QuikTrip announced it is opening a distribution center in RailPort, Midlothian. According to the CEDM, this investment is a promising sign of an economic upturn that is beginning to make its way around the city.
QuikTrip is investing in excess of $25 million into the community of Midlothian, along with more than 40 new jobs. The CEDM underwent four months of negotiation to reach out and secure this company. “We believe QuikTrip will be an asset to Midlothian just as Midlothian will provide them with the location and market to reach North Texas,” says Frank Viso, Executive Director of CEDM.
Headquartered in Oklahoma, QuikTrip is making an increasingly large impact on Texas. Its current distribution centers are located in Missouri, Georgia and Arizona, employing over 400 people, working with a current fleet of 56 tractors and 90 trailers which travel around 3.3 million miles annually.
QuikTrip owns and operates 76 stores in Dallas-Fort Worth. They plan to open eight to ten stores a year for the next ten years in North Texas. QuikTrip has a total of 552 stores in nine states including Texas, Oklahoma, Kansas, Missouri, Iowa, Illinois, Nebraska, Arizona and Georgia, with an average of 15 employees per store.
QuikTrip is excited about the potential return on its investment. “The opportunity for us to have tremendous growth (in North Texas) in store count and additional employees is phenomenal,” said QuikTrip spokesman Mike Thornbrugh.