The Lone Star State Shines Bright in a Dark Economy

State-by-state comparisons still put Texas at the top of the list in employment and growth indicators.

Population (2007): 23,904,380

Largest Cities (2007): Houston, 2,208,180; San Antonio, 1,328,984; Dallas, 1,240,499; Austin, 743,074; Fort Worth, 681,818

Targeted Industries: Aerospace, Aviation, Health Care, Education, Energy, Petroleum Refining

Key Incentives: Emerging Technology Fund, Enterprise Fund, Enterprise Zone Program, Capital Fund Real Estate Development Program

GDP (All Industry 2007): $1.1 trillion*

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

When you are looking at the state of the U.S. economy in terms of which states are thriving and which are not, Texas is one of locations that still rises to the top. In fact, as late as October 2008 the Financial Times ranked Texas as the number one state in the U.S. for its economy in a state-by-state comparison of employment rates, gross state product grown, personal income growth and foreclosure rates. In November 2008, MSNBC in a partnership with Bizjournals, ranked five Texas metros in the top 25 as being positioned best to weather the current economic downturn as part of the 100 largest metropolitan areas experiencing strong steady growth while entering the recessionary period. Six Texas metros rank in the top 15 for the nation’s biggest gains in private sector employment. Houston ranked number one followed by Dallas at number two, San Antonio at number four, McAllen-Edinburg at number nine, Austin at number 10, and El Paso at 13, according to January 2009 U.S. Bureau of Labor Statistics. During the 12- month period ending in December 2008, Texas gained 153,700 jobs.

“In these uncertain economic times, companies across the country are looking to Texas as the place to grow their business thanks to a reasonable regulatory environment, educated workforce, and economic incentives that bolster Texas’ capital and competition in a global
marketplace,” says Governor Rick Perry.

But the governor’s office and economic development officials in Texas aren’t resting on their laurels. By putting an emphasis on current business incentives and creating new initiatives, the state continues to improve its business-friendly outlook.

“Companies around the nation are taking notice of the great climate for business we have in Texas,” says Texas Speaker of the HouseTom Craddick. “By holding the line on taxes and promoting growth, we’ve created an economic climate that is the envy of America. Because of our strong economy, state government has a budget surplus at a time when most other states have a shortfall. This did not happen overnight, and it did not happen by chance.”

One example is the Texas Emerging Technology Fund (ETF) created in 2005, which awards grants to higher education institutions to recruit research talent, funds companies that take ideas from concept to marketplace, and creates public-private partnerships to leverage the unique strengths of universities, federal government grant programs and industry. The results of the program just now are being realized by having given priority to enhancing Texas’ global competitiveness. Gov. Perry recently announced that the state will invest $5.5 million in the University of Houston to create the world-class Institute of Biomedical Research as part of the ETF fund.

“The biomedical industry is one of the largest in our state, and has the potential to greatly improve many Texans’ quality of life with continued research and expansion,” says Gov. Perry. “This world-class research team will lead the charge in developing treatments for diseases that plague our citizens and enhance the University of Houston’s presence as a biomedical research institution.”


• The economic impact of AllianceTexas continues to grow, totaling nearly $34 billion. One of the most successful public-private partnerships in the United States, AllianceTexas has been in a vital economic engine for 20 years. Approximately $100 million of combined initial investment from the city of Fort Worth, the state of Texas and the Federal Aviation Administration in AllianceTexas have yielded $6.5 billion in private investment, 29,000 jobs and more than $625.4 million in property taxes. AllianceTexas consists of the Alliance Global Logistics Hub, Circle T Ranch, Heritage, Alliance Town Center, Saratoga and Monterra Village.

•Texas was the top-ranked state in automotive manufacturing growth in Business Facilities’ 2008 Rankings Report.

Caterpillar Move to Create 1,400 Jobs in Seguin, TX

In December, Caterpillar Inc., a Fortune 50 company, announced that it is moving one of its primary global assembly, test and paint facilities to Seguin, TX, creating more than 1,400 jobs. The project is the second largest in terms of job creation and investment this biennium. Texas was in competition with South Carolina and Mexico for the facility.

“This investment in Caterpillar will not only create high paying jobs for Texans, but will strengthen our state’s overall economic situation and further diversify our state’s economic makeup,” says Gov. Perry.

Caterpillar is a leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and medium and high-speed diesel engines. The company has several operating locations across Texas, including Amarillo, Channelview, Coppell, Dallas, De Soto, El Paso, Fort Worth, Garland, Houston, Laredo, Mabank, McAllen, McKinney, Midland, Sherman, Waco, and Waskom. With this investment, Caterpillar will consolidate and relocate its assembly, paint and testing operations from Illinois and South Carolina to Seguin. The facility will provide engines for Caterpillar machines and electric power generation, as well as petroleum, marine, and industrial customers.

“Caterpillar’s decision to invest and create jobs in Texas is proof that our efforts to attract businesses and grow our economy are working, even in the face of a troubled U.S. economy,” Lt. Governor Dewhurst said. “By keeping taxes low, removing roadblocks to growth and business, and maintaining a skilled workforce through our commitment to education, we will keep Texas moving forward as a national and global economic leader.”

“The incentive package assembled to recruit Caterpillar Inc. was by far the largest and most aggressive the community has ever developed,” says Seguin Mayor Betty Ann Matthies. “Given the capital investment and the number of jobs committed, Seguin, in coordination with the state, delivered the most attractive incentive package to complement the area’s strategic location and excellent workforce. Without our regional and state partners, we would not have been as competitive.”

At Gov. Perry’s request, the legislature created the TEF in 2003 and re-appropriated funding in 2005 and 2007 to help ensure the growth of Texas businesses and create more jobs throughout the state. 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 $365 million and closed the deal on projects generating more than 52,000 new jobs and $13.7 billion in capital investment in the state.

Houston’s Growth Outpaces All U.S. Metros

Not only is Texas still doing well in this economy, Houston is the number one metropolitan area in the country for growth in private sector employment according to the U.S. Bureau of Labor Statistics. It is also one of the top U.S. manufacturing cities according to a May 2008 report in the Manufacturer’s News, and in the summer of 2008 it was named Best City to Live, Work and Play, Best U.S. City to Earn a Living, Best City to Buy a Home and Best City for Your Job by Kiplinger’s Personal Finance, Forbes, and Business Week.

The Houston region is known worldwide as a major corporate center. There are twenty-six companies on the 2008 Fortune 500 list headquartered in Houston, and nineteen of the 2007 Fortune 100 fastest-growing companies are headquartered there. In addition, the region provides an excellent environment for startup and small- and mid-size companies.

What drives this economic success? According to the Greater Houston Partnerhip, the region offers businesses access to the largest port in the United States, the largest medical center in the world—the Texas Medical Center—and more energy industry corporate headquarters than anywhere in the world. The Houston region is geographically centered between the East and West coasts, with a sophisticated transportation system that enables Houston-based companies to conduct business across the nation with ease.

The Greater Houston Partnership recently celebrated its 20-year anniversary. “While much has changed since the beginning of the Chamber, we continue to fight for improvements in the same areas our predecessors did – transportation, free trade and quality of life,” says Jeff Moseley, president and CEO of the Greater Houston Partnership. “We have made and continue to make huge strides in these areas and beyond.”

Adding to its success, Houston was recently chosen by Vestas, the world’s largest supplier of wind turbines, as the location for its new research center in the U.S.

“Houston provides access to a highly qualified workforce in an international and extremely energy-focused research and development environment,” says Finn Strom Madsen, president of Vestas Technology R&D. “In addition, Houston will allow Vestas to establish and strengthen relations within the North American and global energy industry. Tapping into and contributing to the tremendous pool of knowledge and know-how offered by Houston’s energy environment is invaluable in our quest to develop wind turbines that in the future can meet the technological and cost-efficiency demands of our customers.”

Texas and Houston have taken progressive steps to secure their positions as global hubs in an energy landscape that will increasingly rely on renewable sources of energy to supplement the use of fossil fuels. Today, Texas is the leading wind state in the U.S., accounting for 26% of the nation’s total installed wind capacity or the equivalent of the electricity needed to power more than one million Texas homes.

“This partnership with Vestas is the latest step in our state’s aggressive momentum towards a diversified energy portfolio,” says Governor Perry. “Expanding wind energy research and development will only accelerate our state toward energy independence.”

“We’re very pleased to welcome Vestas to Houston,” says Bill White, Mayor of Houston. “They are the clear leader in their field, and Houston is working hard to remain not only the world’s energy capital, but to be the capital of renewable energy, too. Having Vestas as a corporate citizen is a win-win and we look forward to a long, prosperous and constantly renewable partnership.”

Port San Antonio’s New FIS facility

In February, Port San Antonio celebrated the opening of its on-site Federal Inspection Services (FIS) facility, operated by the U.S. Customs & Border Protection Agency. These services will streamline the processing of cargo for customers of Port San Antonio. The full-service facility, along with the personnel manning the facility, are investments made by the Port at no cost to the federal government. In addition to the facility itself, an agricultural laboratory and several storage areas are readily available for the accommodation of bonded goods.

With the addition of its FIS facility, Port San Antonio has bolstered its reputation as a preferred site for international commerce. Along with its railport, air cargo facility, access to several major highways, and now the ability to clear international and agricultural products on-site, will add to its position as an all-in-one solution for the efficient transport of cargo. All of Port San Antonio has been designated as a General Purpose Foreign Trade Zone (#80-10).