Texas continued its streak of wins of Site Selection Magazine’s “Governor’s Cup” competition, which goes to the state with the most major corporate location and expansion projects in a year. The 2017 win is the sixth in a row, and the Lone Star State also won in 2004, 2005, and 2010 (and was a close second in several of the years between). It’s impressive by any measure, and more so given the fact that a major export industry (energy) was struggling during part of the time.
Only projects with a capital investment of at least $1 million, 20 or more new jobs, or 20,000 square feet of new construction are counted. Last year, Texas had 594 such projects, which is down from 642 in 2016 and 702 in 2015. Texas finished well ahead of second-ranked Ohio (467 projects) and the rest of the top five of Illinois (419), Georgia (281), and North Carolina (274). Of the top five, only North Carolina’s projects total was up in 2017 over the 2016 level.
The state’s success is due to a spectrum of benefits to potential locating companies. At the most basic level, Texas has resources — a large and growing population, oil and gas, a coastline favorable to shipping, abundant land (much of which is excellent for farming), a relatively moderate climate, and a central location, among others. All of these characteristics provide opportunities.
In addition, decisions made and efforts undertaken in decades past fundamentally changed and enhanced the state economy. Visionary business and community leaders took action, and the benefits are still being realized. For example, the roots of the Texas technology sector go back to attracting MCC (the Microelectronics and Computer Technology Corporation, which was the first and at one time the largest research and development consortium in the industry) and Sematech (a non-profit research and development consortium focusing on chip manufacturing) to the state back in the 1980s.
Herculean efforts were required to get these leading-edge research organizations to come to the state. Individuals in the public and private sectors, the University of Texas and the state’s other research universities, and a variety of entities were involved. In fact, when Austin was selected for MCC (with incentives including a subsidized lease, low-cost mortgages for personnel, and upgrades at UT and Texas A&M programs in computer science and electrical engineering), competing cities were heard to complain that Austin bought the project. That’s an overstatement, of course, because Texas offered a favorable location in a number of other ways, but to the extent that incentives tipped the scales and contributed to a “win” for the state, it was money well spent (to say the least). In truth, the Texas offerings were less than some others, but were structured in an advantageous manner.
Another decision which is paying off is the path Texas took to introducing competition into electric power. The state’s method of deregulating has served as a model for other areas and has resulted in more consumer choice and lower prices than we would have otherwise. The requirements related to developing renewable energy sources contributed to rapid and extensive increases in wind and solar capacity. Now, with attention to climate change and carbon footprints continuing to increase, some firms are basing location decisions on the ability to purchase all needed power from renewable sources. High-profile firms such as Amazon, Google, and Apple are committed to using green power in data centers and other facilities, for example. The fact that Texas has more wind power than any other state (by a huge margin) as well as solar and other forms of renewable energy is a notable competitive advantage.
These are only two of many examples of wise courses of action taken decades ago which continue to pay benefits. In fact, Texas was never close to the top of the list prior to implementing a number of innovative incentive programs, which remain vital to recruitment efforts. For most location decisions, however, the primary consideration is workforce. In Texas, our large population is not only growing, but also younger than in many areas. We have education and training in place which is turning out people prepared to fill the needs of today’s complex businesses. Furthermore, the state has a reputation for high productivity and a can-do attitude among workers. I have heard countless comments as I travel around the nation (and beyond) about the overwhelmingly impressive responses of individuals, businesses, government agencies, and everyone else during the Hurricane Harvey crisis. The eyes of the world were on the Lone Star State, and the courage and resilience demonstrated was (and still is) inspiring.
Texas is well positioned to remain a growth leader. There are daunting challenges, but we can deal with them through enlightened public policy. Working to continue to improve across the spectrum from education to infrastructure is important, as is ensuring we keep pushing forward in purposeful and strategic economic development. Texas also needs to avoid the types of policies that are viewed unfavorably by technology companies and knowledge workers. Luck of the draw gave the state an enviable starting point, but it’s no accident that we are where we are. The choices made now can set the stage for future prosperity, keeping Texas at the top of the list of places to live and work for decades to come.
