|WACO, March 20 - Texas has (once again) won Site Selection magazineís Governorís Cup, meaning that the Lone Star State had more corporate location/expansion projects in 2013 than any other state.
To be counted, a project has to either involve a capital commercial investment of at least $1 million, 50 or more new jobs, or 20,000 square feet of new construction. Last year, Texas had 657 such projects, far outpacing second-place Ohio (which had 480). Others near the top of the list include Illinois (with 383), Pennsylvania (348), and Michigan (312).
The win is not a first for Texas; we also won in 2004, 2005, 2010, 2012, and 2013 and were a close second in several of the intervening years. Itís no accident or stroke of luck. Instead, the stateís success is based on building on strengths to develop the kind of business climate that companies find attractive. There are other places with similar resources (such as California) that arenít even in the ballpark. In the years just before Texas implemented its major economic development programs in 2003, we ranked as low as 37th.
As Iíve mentioned before, Texas is leading the way in job creation. Currently, eight percent of all jobs in the nation are in Texas. The state has accounted for nearly two million (31 percent) of the net new jobs created in the United States since 2000 and more than a million new jobs since the depths of the downturn. One reason is the oil surge, with drilling and related activity spurring job gains in communities near historically active fields (such as the Permian Basin) as well as fields only recently economically viable to explore and produce (including the Eagle Ford and Cline Shale plays).
However, the current Texas strength derives from many other sources in addition to energy, and we were at or near the top of the Governorís Cup rankings well before the oil surge began. Business operations in a variety of industries continue to move to the state to take advantage of workforce, regulatory, tax, and other competitive benefits. From chemicals companies to biosciences firms to technology manufacturers and more, firms have been attracted by the stateís favorable business climate.
Also noteworthy are Texasí economic development incentive options, which can be the difference between making the short list of potential locations and sealing the deal. While in an ideal world such tools might not be needed, the fact of the matter is that other states are offering them, and Texas must do so as well if we want to remain competitive. The success rate isnít perfect, of course, but the money invested by the State in incentive programs has paid off in a big way.
Key programs include the Texas Enterprise Fund (TEF) widely known as the largest "deal-closing" fund in the nation. It is used for projects with significant projected job creation and capital investment when a Texas site is competing with another viable out-of-state option. The Texas Emerging Technology Fund (TETF) is targeted at research, development, and commercialization of emerging technologies. There is also special financing, workforce training, tax incentives, and grants. And thatís just at the state level; local communities also offer competitive packages to attract prospective new businesses, a process that was transformed 25 years ago with the economic development sales tax.
The result is a steady inflow of desirable corporate locations. The new commercial ventures offer jobs for Texans and tax receipts for the State and local governments. Many of the new positions are well paying, and there is evidence that Texas leads in job gains across all levels of wages.
Cities large and small are benefitting. The Milken Institute ranks top performing cities every year, and the 2013 list puts the Austin-Round Rock-San Marcos Metropolitan Statistical Area at the top. Dallas-Plano-Irving came in at seven, Houston-Sugar Land-Baytown at eight, and San Antonio-New Braunfels at 12. Fort Worth-Arlington, Corpus Christi, and Laredo also ranked in the top 25 among large cities. For small cities, Midland was five, Longview seven, San Angelo eight, and Odessa was 14, with Victoria and Waco also in the top 25. These population centers run the geographic gamut: East Texas, West Texas, Central Texas, the Border, and the High Plains. The types of businesses driving expansion also vary widely.
Itís gratifying to observe Texasí success. I have been on the front lines in much of the effort to enhance the stateís competitiveness, performing economic development studies, testifying before Texas legislative committees, working with potential locating companies, and more. Believe me, the stateís strong performance is no accident. Countless people have put in countless hours working to improve the opportunities and prosperity for all Texans. Winning awards such as the Governorís Cup is a very tangible sign that it is working.
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.