This is part two of Business Facilities’ 12th Annual Rankings Report: Metro Rankings. Click here to read part one, State Rankings.
SAN ANTONIO, TX: ECONOMIC GROWTH POTENTIAL LEADER
Just about every kind of business finds San Antonio welcoming. But some specialized fields are finding this city positively magnetic, drawing industry leaders, support firms, talent and capital together to form a vibrant, self-expanding center that has made San Antonio our top-ranked metro for Economic Growth Potential.
Burgeoning specialized sectors in San Antonio include aerospace/aviation; bioscience/healthcare; environmental technology/green industry; financial services; IT/cybersecurity; manufacturing; and military/defense.
San Antonio’s aerospace industry includes a range of businesses that manufacture aircraft equipment and parts, service and repair aircraft, produce and distribute transportation equipment and supplies, provide both scheduled and unscheduled air transportation and operate flight schools.
The local aerospace industry has grown by over 400 percent in the last 25 years. More than 13,000 San Antonio employees work in the combined aerospace-related maintenance, repair and operations (MRO), manufacturing, military and air transportation services industry. Jobs in the aerospace industry are among the best paying in the area. According to a SWOT analysis by Deloitte, the average wage for aerospace employees is $59,801.
San Antonio also boasts the Alamo Area Aerospace Academy program, which works in close partnership with industry, and serves as a national model for developing a pipeline between local high school students and aerospace employers. The Aerospace Academy offers both classroom instruction and real-world experience through full-time paid internships provided by industry partners. Upon finishing high school, graduates of the program are ready to launch their careers with area aerospace firms, and are well on their way toward qualifying for their Federal Aviation Administration Airframe & Powerplant Mechanics’ certificates.
The San Antonio area has a number of dynamic aerospace companies, which are primarily concentrated in and around the following locations:
- Port San Antonio (PSA) is a 1,900-acre platform for aerospace, heavy industrial and international logistics. The site features an industrial airport, Kelly Field (SKF), with the region’s largest runway. The Port also operates an adjacent 350-acre railport, East Kelly Railport, directly accessible by cargoes that travel on Union Pacific and BNSF Railway trains. Aerospace and aviation companies represent several of the Port’s anchor tenants, including marquee names like Boeing, Lockheed Martin Commercial Engine Solutions, Chromalloy, GDC Technics, SAFRAN and Standard Aero. These Port customers operate within more than 3.5 million square feet of highly specialized facilities, including hangars that accommodate multiple wide-bodied aircraft, workshops and an array of engine test cells. The Port’s fixed-base operator, Atlantic Aviation, supports private, cargo, charter, commercial and military aircraft. The Port also offers 400 acres at Kelly Field for the construction of future hangars and workshops—one of the few sites in Texas that can support large-scale aerospace projects requiring runway access.
- San Antonio International Airport (SAT), besides providing commercial airline service for the South Texas region, is a major economic generator for the region, supporting over 97,500 regional jobs and providing nearly $1.6 billion in annual earnings for workers and proprietors. The airport has four fixed-base operators (FBOs) and companies that provide a breadth of offerings to include worldwide logistics support and maintenance for a variety of commercial and military aircraft. The airport’s largest direct industry employer is VT San Antonio Aerospace, which has 1,200 workers performing the highest-quality MRO services for cargo operators and commercial airlines within a 50-acre site that has more than 700,000 square feet of work space.
With San Antonio’s diverse mix of nationally recognized healthcare systems, well-regarded research institutions, health profession education programs, cutting-edge biotech companies and successful national corporations, the bioscience and healthcare industry is a dominant force in the city’s economy. The industry includes both direct and indirect healthcare services. Direct healthcare services include care provided in hospitals, physicians’ offices, nursing homes, offices and clinics of a variety of other healthcare providers, and various other outpatient and ambulatory care settings. Indirect related industries complement and support the provision of medical and healthcare. These industry sectors include health insurance carriers, pharmaceutical companies, medical equipment producers and manufacturers, civilian and military medical education, biomedical research organizations, residential care and social service providers, and a variety of related endeavors. In 2013, according to a Greater San Antonio Chamber of Commerce study, the economic impact of the Bioscience and Healthcare industry was more than $23.9 billion measured conservatively or $30.6 billion by a more comprehensive estimate. This comprehensive estimate takes into account the full impact of academic and military medicine, which are integral components of San Antonio’s biomedical sector. One of every six San Antonio employees works in the Bioscience and Healthcare industry, which has added 41,567 net new jobs over the past decade, fueling San Antonio’s growth.
BATON ROUGE, LA: LOWEST COST OF BUSINESS
Baton Rouge, LA is our top-ranked metro for Lowest Cost of Business, which is based on KPMG’s 2016 Competitive alternatives study. The bi-annual survey from the audit, tax and advisory giant focuses on mid-sized U.S. metros (with populations between 750,000 and 2 million).
Baton Rouge’s favorable costs for industrial facility construction, property taxes, natural gas, electricity and labor all contributed to its first place ranking in the study, which compares U.S. cities across a range of costs and other factors related to doing business.
New Orleans was the second most cost-competitive location in the mid-sized category, followed by Nashville, TN, Omaha, NE, Albuquerque, NM and Memphis, TN. Other locations ranked among the top 10 included Indianapolis, IN, Oklahoma City, OK, Salt Lake City, UT and Raleigh, NC.
The 2016 KPMG Competitive Alternatives study measured 26 key cost components in each market, including costs associated with taxes, labor, facilities, transportation and utilities, as they apply to seven different business-to-business service sector operations and 12 different manufacturing sector operations. The KPMG study revealed that Baton Rouge had a cost index of 92.8, representing business costs 7.2 percent below the U.S. national baseline of 100.0. New Orleans followed at 93.1, Nashville at 93.8 and Omaha at 93.9. Contributing factors to the top ranked mid-sized U.S. cities follow:
Baton Rouge’s top ranking results primarily from its low property taxes and low costs for industrial construction and natural gas, coupled with the second lowest electricity costs and moderately low labor costs. Various state incentives help give Baton Rouge the second lowest effective corporate income tax rate.
Relative to nearby Baton Rouge, New Orleans has higher labor, electricity and property tax costs and ranked second for industrial construction costs. However, New Orleans has the lowest effective corporate income tax rate among the group of mid-sized cities compared, as well as low transportation and office lease costs.
Nashville has the lowest total labor costs among the mid-sized cities, the third lowest costs for salaries and wages, and second lowest statutory plans and benefits costs. Nashville also has the lowest transportation costs, and together these help it to achieve the lowest total operating costs. Facility costs also are moderately low and it ranked third for office leasing and fifth for both industrial land and industrial construction costs. Ranked fourth overall, Omaha was fourth for electricity, natural gas, industrial leasing and effective corporate income tax rate. Omaha also shows strong results in most aspects of labor costs, and ranked second for salaries and wages and fifth for total labor costs. Albuquerque, at 94.4, showed strong results in all aspects of labor costs. While it ranked third for total labor costs, Albuquerque’s costs are only 0.6 percent higher than first-placed Nashville for this factor. Albuquerque also ranked third for its effective corporate income tax rate.
Memphis ranked sixth overall, at 94.4, with strong advantages in costs related to industrial facilities. The city was also first for both industrial land acquisition and industrial facility leasing, and fourth for construction costs for new industrial facilities. Very competitive transportation costs, together with relatively low statutory and benefit costs and natural gas costs all help Memphis achieve the second lowest level of operating costs among the mid-sized cities, behind only Nashville.
Indianapolis, at 94.6, has the lowest statutory plan costs (as a percentage of wages) and third lowest costs for industrial land, office leasing and sales taxes, contributing to the city’s seventh rank overall. The city also has relatively low costs for transportation.
Oklahoma City, at 94.7, has the lowest costs for wages and salaries, and electricity. Higher costs in other areas such as statutory labor, transportation and taxes limit Oklahoma City’s overall cost ranking to eighth. Property taxes represent the most competitive tax component for this location, ranked fifth for this factor.
MEMPHIS, TN: LOGISTICS KING
This year, we’ve based our Logistics Leaders metro ranking on the locations which have tremendous assets serving all modes of transportation: air, land, water and rail. When all modes are measured, the undisputed logistics champion is Memphis, TN.
With its natural geographic advantage, its deep pool of skilled logistics workers and its intermodal edge, the core competency in Memphis is distribution and logistics. Home of the world headquarters and hub of shipping powerhouse FedEx, over 400 trucking companies and major operations of UPS and USPS, Memphis is uniquely positioned to provide the most cost effective distribution and logistics services in the country. Five class-one railroads also offer service in Memphis, which has a higher percentage of logistics workers than any other metropolitan area in the country.
Known as “America’s Distribution Center” for the past three decades, Memphis is redefining global logistics. The TN city on the banks of the Mississippi River earned the distinction of being America’s first and premier Aerotropolis because its location, at the very heart of North America, provides easy access for moving people and product around the world. An aerotropolis is defined as a city or an economic hub that extends out from a large airport into a surrounding area that consists mostly of distribution centers, office buildings, light manufacturing firms, convention centers and hotels, all linked to the airport via roads, expressways and rail lines.
In 2006, the Greater Memphis Chamber created the Aerotropolis Steering Committee to capitalize on the region’s logistics assets and initiate revitalization efforts of the neighborhoods bordering the airport. The city applied for and received funding from HUD’s Community Challenge Grant for the creation of master plan for the Airport City and surrounding areas.
With the Memphis International Airport at the core, Memphis’ Aerotropolis region includes Shelby County, northern DeSoto and Tunica counties in Mississippi and western Crittenden County in Arkansas. Proximity to the FedEx World Hub has drawn several top logistics and distribution operations to Memphis, including: Target Corp.’s e-commerce distribution Center in Southeast Memphis and Nike’s three local distribution facilities in Memphis, which serve as the company’s main retail and wholesale distribution operation for North America.
ROCHESTER,NY: TOP INNOVATION HUB
Greater Rochester, NY tops the chart in our new ranking of Innovation Hubs, followed by Albany, NY which has become a world leader in nanotechnology, and Youngstown, OH, the leader in the emerging growth sector of 3D printing.
In July 2015, the American Institute for Manufacturing Integrated Photonics (AIM Photonics) was launched in Rochester. The institute will help establish the region as a national hub for producing next generation integrated photonics, a light science with the potential to transform communications, medicine and national defense, and also possibly create thousands of jobs.
Western New York already has about 100 companies focused on optics and photonics. Their work ranges from designing lenses for the recent New Horizons mission to Pluto, to lasers and optical systems used in IMAX theaters.
The institute is bringing together government, industry and academia to further advance photonics research and its commercial uses. The project will be funded in part by $110 million from the U.S. defense department, with an additional $500 million in state and private investment.
The integrated photonics manufacturing institute is envisioned as a photonics “ecosystem” that includes domestic foundry access, automated packaging, assembly and workforce development. The photonics center will harness the power of the Defense Department and the prowess of Rochester’s 24,000 employee-strong photonics industry and focus it like a laser beam to launch new industries, technologies and jobs. Led by the Research Foundation of the State University of New York (RF SUNY), the photonics institute involves a consortium of 124 partners, including 55 companies, across 20 states. Among the private-sector partners are big-hitters like IBM, GE, Raytheon and Lockheed Martin, alongside the likes of Chiral Photonics, Optimax and TeraDiode. Other partners include key locations for photonics development, including the University of Rochester, Massachusetts Institute of Technology (MIT), the University of Arizona’s (UA) College of Optical Sciences (OSC) and the University of California, Santa Barbara (UCSB).
Integrated photonics—devices that bring together multiple optics-based functions, often on an integrated circuit—is expected to revolutionize the carrying capacity of Internet networks, enhance medical technology and improve imaging-sensing capabilities for national defense and security.
The U.S. has been a world leader in developing photonics technology for the past century. Defense applications and technologies encompass night vision systems, satellite surveillance systems, infrared, flexible displays, sensors, detectors, data communications and lasers.
Rochester is the oldest and largest hub for photonics manufacturing in the U.S. Long-time home of optical technology pioneer Eastman Kodak, photonics companies such as Harris Corporation, Sydor Optics and Optimax have all recently opened or expanded operations in the region. More than $130 million of the awarded funds will be invested in the Rochester region.
The College of Nanoscale Science and Engineering (CNSE) in Albany, NY is the first college in the world dedicated to education, research, development and deployment in the emerging disciplines of nanoscience, nanoengineering, nanobioscience and nanoeconomics. With more than $14 billion in high-tech investments, CNSE represents the world’s most advanced university-driven research enterprise, offering students a one-of-a-kind academic experience and providing over 300 corporate partners with access to an unmatched ecosystem for leading-edge R&D and commercialization of nanoelectronics and nanotechnology innovations.
CNSE’s footprint spans upstate New York, including its Albany NanoTech Complex, an 800,000-square-foot megaplex with the only fully-integrated, 300mm wafer, computer chip pilot prototyping and demonstration line within 85,000 square feet of Class 1 capable cleanrooms. More than 2,700 scientists, researchers, engineers, students and faculty work at the Albany complex, from companies including IBM, Intel, GlobalFoundries, SEMATECH, Samsung, TSMC, Toshiba, Applied Materials, Tokyo Electron, ASML and Novellus Systems. An expansion, part of which will house the world’s first Global 450mm Consortium, is adding nearly 500,000 square feet of next-generation infrastructure, an additional 50,000 square feet of Class 1 capable cleanrooms, and more than 1,000 scientists, researchers and engineers from CNSE and global corporations.
The burgeoning tech clusters in Rochester and Albany are propelling New York into a national leadership position in high-tech development. CNSE’s Solar Energy Development Center in Halfmoon provides a prototyping and demonstration line for next-generation CIGS thin-film solar cells, supporting its leadership of the U.S. Photovoltaic Manufacturing Consortium (PVMC). CNSE’s Smart System Technology and Commercialization Center of Excellence (STC) in Rochester offers state-of-the-art capabilities for MEMS fabrication and packaging. CNSE also co-founded and manages operations at the Computer Chip Commercialization Center at SUNYIT in Utica and is a co-founder of the Nanotechnology Innovation and Commercialization Excelerator in Syracuse.
The first U.S. Manufacturing Innovation Institute was founded in Youngstown, Ohio in 2012 to help advance and accelerate the U.S. 3D printing industry, also known as additive manufacturing. Known as America Makes, it is operated by the National Center for Defense Manufacturing and Machining (NCDMM), consisting of more than 140 manufacturers, small- and medium-sized enterprises, academic institutions, non-profit organizations and government agencies. America Makes is at the epicenter of a fast-growing 3D printing technology hub known at the Tech Belt, a region stretching from Northeast Ohio to Western Pennsylvania and Northern West Virginia.
At the heart of the corridor is the Youngstown Business Incubator, the No. 1 university-associated incubator in the world. According to the Youngstown Warren Regional Chamber, the incubator has led to the creation of hundreds of high-tech jobs that have helped breathe life into a downtown that was once on life support. Also located within the corridor are Youngstown State University, home of a state-of-the-art materials science program, and the Tech Belt Energy Innovation Center, which is working towards advancements in energy storage.
The Youngstown institute works in collaboration to reduce the cost of 3D printing, connect small businesses with new opportunities and train U.S. workers to master 3D printing technology.
3D Printing has the potential to influence nearly every segment of manufacturing, from end-use products, to mass customization, to unique one-off medical products, to tooling and fissuring used in manufacturing production. This exciting technology is providing cost- and time-savings, energy reduction and quality improvements in many areas.
Recent successes include launching The America Makes Capabilities Database, a searchable, online directory that provides information regarding the additive manufacturing (AM) capabilities of each America Makes member organization; and Youngstown State University’s new Launch Lab, where engineering students are designing and creating prototypes to make hard-to-find airplane parts for the Air Force Research Lab. Once a prototype part is created, the students are using 3D printing technology to create tooling so the part can be manufactured in quantity.
Our Entrepreneurship Leaders category offers proof that it doesn’t take a metropolis or the deep-rooted brainpower of California’s Silicon Valley to develop a hub for tech startups.
Never heard of the Silicon Prairie? That’s right. The states in the middle of the U.S., sometimes derisively referred to by coastal elites as “flyover country,” have become a prime destination for entrepreneurs who are putting down roots for new tech startups. The tech-startup activity is so brisk in Nebraska, Iowa, Kansas and Missouri that there’s an online newsletter devoted to covering the new startups in the region. The primary focus of siliconprairienews.com is the Omaha-Kansas City-Des Moines triangle.
In the middle of this triangle is our third-ranked metro among Entrepreneurship leaders, Lincoln, NE. A report earlier this year from CBS News on the entrepreneurial activity in Lincoln, NE called tech startups “the biggest new cash crop” in America’s breadbasket. It’s not a stretch to say that Lincoln, now home to more than 100 software startups, is becoming a “mini Palo Alto.” Once-abandoned buildings now house co-working spaces and incubators.
The CBS report highlighted the decision by the founders of Bulu Box, an online service that provides monthly samplers of premium health products, to plant their flag in Lincoln. Here’s the kicker: the entrepreneurs who started the service, Stephanie and Paul Jarrett, lived in San Francisco.
“We could [have been] another startup on the West Coast, another startup in the Valley or we could be part of this movement,” Paul told CBS. “It felt like people in Nebraska—investors, other connections—would bend over backwards to help you,” Stephanie added. Since its 2012 launch in Lincoln, Bulu Box has signed up 100,000 subscribers and last year generated $5 million in sales. The Jarrett’s cost of living improved dramatically when they moved from San Francisco to Lincoln: the median price for a home in San Francisco is about $1.1 million; in Lincoln, it’s about $158,000. The Jarretts also said they were able to grow their team (and office space) in Lincoln a lot faster and with a lot less capital than it would have taken in Northern California.
Another tech player based in Lincoln is Hudl, which developed software that can instantly analyze game film sent to its site by professional and amateur sports teams. Hudl co-founder David Graff credited the support he received from Nebraska’s university system as a key to his company’s success. He started with three employees and now has 400, including workers in 14 countries. Graff is planning to build a new global HQ in Lincoln.
In 2015, almost three-quarters of high-tech investment dollars still went to the nation’s traditional tech heavyweights: California, New York and Massachusetts. But Steve Case, a co-founder of AOL, is placing a big bet that this trend is about to change. Case has launched Revolution, a venture-capital firm that plans to invest about $1 billion in tech startups in the middle of the U.S.
Another location putting out the welcome mat for entrepreneurs is Winston-Salem, NC, no. 4 in our Entrepreneurship Leaders category.
Last year, Winston-Salem was named a Startup Grind city, joining a global network of cities working to fuel innovation, economic growth and prosperity at the local level. Flywheel, a coworking innovation space in the Wake Forest Innovation Quarter, applied on behalf of Winston-Salem and has been hosting Startup Grind events for the city and region for the past year. Founded in 2010, Startup Grind is a global startup community designed to educate, inspire, and connect entrepreneurs. In more than 150 cities and 65 countries around the world, chapters host monthly Startup Grind events where local founders, innovators, educators and investors share their own success stories.
“The selection process is very rigorous,” said Peter Marsh, cofounder of Flywheel. “We had to prove the vibrancy of our startup ecosystem and that we could execute compelling events with successful entrepreneurs on a regular basis.” The ratio of cities accepted versus total applications is around one in ten. Marsh is co-director of Startup Grind Winston-Salem, along with Flywheel Community Manager Jennifer Berg.
Startup Grind is also a major initiative of Google for Entrepreneurs, extending the network of relationships even deeper into the global tech community. Startup Grind founder and CEO Derek Andersen said Google For Entrepreneurs will help Startup Grind expand internationally by providing access to distribution, Google technology and financial support.
Startup Grind is a perfect fit for Flywheel’s mission and vision for entrepreneurship in the Wake Forest Innovation Quarter. “Very few for-profit coworking operators have a direct link to a multimillion-dollar commercialization enterprise right outside their door in the form of Wake Forest Innovations, The Wake Forest Innovation Quarter is one of the fastest growing urban-based research parks in the United States, with a master plan for as much as six million square feet of world-class office, laboratory and mixed-used space over its 145 developable acres.
THE LIVING IS GOOD IN OKC
This year, by popular demand, we’ve decided to revive our Quality of Life ranking. It seems like every business publication in the known universe issues an annual Quality of Life list, but no one can agree on a set of criteria for this ubiquitous and often highly subjective choice. In culling the herd for our top 10, we’ve given extra weight to cost of living and economic growth potential, among other factors. Three cities top our list of the best places to call home, Oklahoma City, Nashville and Minneapolis.
By just about any benchmark you can raise in evaluating the quality of life in a location, OKC is a frontrunner.
OKC has bragging rights for strong economy (with incredibly short commute times), low unemployment rates, more bang-for-your-buck housing value and a billion-dollar investment in its public schools. If recreation is your top priority, OKC offers arts districts, museums, a family-friendly zoo and waterparks, professional sports, live theater, live music, riverfront and boathouse district activities, as well as a fabulous local restaurant and food community.
Over the past decade, Oklahoma City has seen unprecedented growth, and the end is nowhere in sight. Fresh off what is said to be the largest urban makeover in U.S. history—with more than $5 billion invested in new development—Oklahoma City has spruced up, renovated and entered the 21st century with what has become signature gusto. Its new-found adrenaline is reflected in a gleaming downtown; a robust economy; a sparkling, reclaimed river and a neon-lit canal flowing through Bricktown, one of the fastest-growing entertainment districts in the Southwest. Just a short walk from downtown hotels, event venues and attractions, this former warehouse district is filled with restaurants, nightlife and entertainment options. From taking a cruise along the Bricktown Canal to catching an Oklahoma City Dodgers game at the Chickasaw Bricktown Ballpark, Bricktown is a favorite destination for visitors and locals alike. And just north of Bricktown is historic Deep Deuce, where you can find more great restaurants and nightlife options.
One of the biggest attractions in OKC is the SkyDance Pedestrian Bridge. The walkway that soars more than 200 feet above Interstate 40 in downtown Oklahoma City has become one of the city’s most unique landmarks. The design is inspired by the “sky dance” of the scissor-tailed flycatcher, Oklahoma’s state bird. The 380-foot-long pedestrian bridge and 197-foot-tall sculpture spans I-40 near Robinson Avenue south of downtown. It’s made of stainless steel panels that shimmer in the sun and is illuminated nightly with LED color-changing lights.
Planning for SkyDance Bridge began in 2008 when then-Mayor James Cornett announced a competition to design a pedestrian bridge of “iconic status that reflects the cosmopolitan and vibrant qualities of Oklahoma City and serve as a symbol for the City.” The bridge opened four years later on April 23, 2012 and was designed by a local firm, MKEC Engineering and Butzer Design Partnership, led by Hans Butzer. Butzer is well known for his work on the Oklahoma City National Memorial Museum.
Oklahoma City has something for everyone. Gaze in awe at the world’s tallest Chihuly glass tower, or climb to the top of one of the region’s tallest rock climbing walls (built in an abandoned grain silo); conquer a skate park designed by Oklahoma City’s own champion BMX racer Mat Hoffman, or skim across Lake Hefner in a sailboat or on a sailboard.
But anybody who hails from the middle of the Sooner State can tell you that OKC’s biggest asset is its people: they greet you with world-class friendliness and a community spirit that produces one of the highest rates of volunteerism in the nation.