By Robert Allen, TxEDC President, CEO
A Strong Pro-Business Climate
Texas is one of the country’s most dominant state economies thanks to its carefully constructed business environment, opportunities for employment and overall measured growth. Texas leaders in business and economic development maintain robust conditions for growth by increasing tax benefits for businesses, funding infrastructure improvements and facilitating overall growth.
Last year, the population of Texas grew by 367,000, more than any other state. Additionally, Texas added almost 1,000 jobs a day and set the record for the lowest unemployment rate in the state’s history since 1976. Texas leads the nation in job creation, and its leaders are committed to continuing this strong economic growth.
According to the Governor’s Office of Economic Development, “Texas prides itself on being a right-to-work state and will continue to make strategic investments to ensure it maintains our competitive advantage, allowing businesses to prosper and grow.”
Photo Caption: The Capitol building in Austin, TX.
Governor’s Budget and Incentives
In 2019, Governor Greg Abbott outlined his plan for maintaining a business-friendly climate in his 2020-2021 Governor’s Budget. The extensive budgetary plan allots “the funds required to create, preserve, and expand the environment for a robust economy: low taxes; light, fair and efficient regulation; public safety; and a free and educated population and workforce.”
In order to accomplish this, Governor Abbott recommended adding $150 million to the Texas Enterprise Fund (TEF) for the next fiscal year. The TEF provides cash grants to businesses in order to develop expansion, relocation and investment projects and ultimately create job opportunities across the entire state. Another program, the Texas Enterprise Zone Program, uses state funds to encourage companies to make capital investments and create jobs in areas of Texas that are under economic distress.
Fueling Businesses with a Robust Talent Pipeline
In addition to business incentives, Texas provides support for educational incentives as well. The Economic Development & Diversification In-State Tuition for Employees Program grants in-state tuition rates at Texas’ public colleges and universities to employees (and their family members) of qualified companies relocating or expanding in Texas.
Another educational incentive program is The Governor’s University Research Initiative Grant Program (GURI), established by Governor Abbott in 2015. GURI’s goal is to improve the standings of public universities and colleges across Texas by recruiting internationally recognized researchers. These researchers in turn have contributed to furthering Texas’ economic development. Since the enactment of GURI, the Office of the Governor has approved $54,274,216.50 in matching funds to the University of Texas at Austin, Texas A&M University, University of Houston and Texas Tech University.
If Texas were its own nation, it would be considered the tenth largest economy in the world. Over 14 million people who work in the Lone Star State make up the second largest civilian labor force in the country, fueling businesses with a huge supply of skilled talent. Programs like GURI help educate this booming population of working talent within Texas, in addition to the 37 public universities and upper-division centers, which includes six state university systems and 50 community college districts.
History of Low Tax Legislation
In addition to the allotment of funds for investment and expansion projects, Texas has historically prioritized keeping taxes low for businesses. In light of increasing property taxes, Texas passed extensive tax reform legislation that provided $5 billion to alleviate much of these costs for businesses. In addition to property tax reform, Texas fought to ensure that there is no corporate or personal income tax. Because of this, The Tax Foundation ranked Texas in the top 10 states for lowest overall tax burden.
Growing Texas’ Hearty Infrastructure
Texas is home to a variety of robust infrastructure including 382 airports, 16 seaports, over 313,220 miles of public roads and 10,539 miles of freight rail. There are more miles of public roads and freight rail in Texas than anywhere else in the U.S.
The Dallas-Fort Worth area is home to the headquarters of American Airlines and Southwest Airlines, two of the largest global airlines, along with Alliance Airport, which is the first solely industrial airport in the world. Additionally, the deep-water Port of Houston is one of the top ten ports in the nation and The Fort Worth Alliance Global Logistics Hub is one of the top global inland ports.
Top Exporting Power
Ports and logistical hubs connecting air, road and rail, like Alliance Global in Fort Worth, generate billions of dollars in economic activity for the state each year. Texas’ annual six percent export growth since 2002 is almost double the 3.6 percent rate for the rest of the country. Furthermore, over $330 billion worth of goods were exported from Texas in 2019 – an increase of more than 4.7 percent over 2018. Each Texas port plays a distinctive role in the state’s transportation network and contributes to economic activity at the local, state and international levels.
This graph from the Federal Reserve Bank of Dallas demonstrates the significant increase in Texas’ exports since 2016.
Aerospace & Defense
Texas is home to a wide variety of industries that employ millions of the state’s residents. The aerospace, aviation and defense industry alone directly employs over 130,000 Texans. The state’s infrastructure, including some of the busiest commercial and industrial airports in the world, has contributed to Texas becoming an incredibly important location for the global aerospace and aviation industry. NASA’s world-famous Johnson Space Center in Houston and the 15 active military bases in Texas also strengthen the diverse industry landscape and attract many of the largest aviation companies.
Lockheed Martin’s impressive Air Force Plant 4 facility in Fort Worth is the largest employer in Tarrant County with about 14,000 workers, representing an economic impact of $634 million. In addition, the world’s largest helicopter repair facility is located at the Corpus Christi Army Depot. The cities of Amarillo, El Paso, Harlingen, McAllen, Waco and Wichita Falls also support manufacturing facilities for various Fortune 500 aerospace companies.
Nationally ranked in the top ten for automotive manufacturing employment and establishments, Texas is home to a strong automotive manufacturing sector that has continued to grow throughout the twenty-first century.
Given its proximity to Mexico and its shared border, Texas has become an important part of the realigned North American “auto alley,” running north from Mexico through many southern U.S. states. Texas serves as a key link between Mexico’s auto plants and the U.S. auto industry.
Texas is home to 1,752 automaker facilities and ranks seventh in the U.S. for automotive manufacturing employment. In addition, Texas automotive exports have more than doubled from $9.2 billion in 2009 to over $18.5 billion in 2016.
In September 2019, Toyota Motors and Aisin AW announced a combined investment of almost $800 million in Texas, with Toyota investing $391 million at its San Antonio truck assembly plant and Aisin AW investing $400 million toward a future facility that will bring 900 jobs to Cibolo. The total economic impact of these combined investments will surpass $10 billion with an employment multiplier of 40,000 jobs over the next 10 years, according to the San Antonio Economic Development Foundation.
The Lone Star State’s renewable energy potential is among the largest in the nation, with abundant wind, solar, and biomass resources found across the state’s geographically diverse regions. Specifically, Texas leads the nation in wind power generation, contributing to more than one-fourth of the U.S. total in 2018.
Texas is the nation’s top wind energy producer with a capacity of 17,700 MW – more than double the installed wind power capacity of any other state. If Texas were a nation, it would rank sixth for installed wind capacity behind only China, the rest of the U.S., Germany, India, and Spain. In 2018, direct wind industry jobs in Texas totaled over 25,000, and Texas ranked second in the nation for installed solar capacity.
Trends in Texas indicate that the state is moving away from power generated by natural gas and turning to alternative forms of energy like solar and wind. Therefore, wind developers in Texas are expected to add 30 gigawatts of power, or 27 percent of total new capacity, in the next three years.
A Year in Review: Texas’ Top Investments in 2019
- Niagara Bottling in Temple: Niagara Bottling, LLC, the nation’s largest family owned and operated beverage supplier, announced a $90 million capital investment for a new bottling facility in Temple in February 2019, which will create 70 new jobs.
- Dollar Tree in Rosenberg: In February 2019, Dollar Tree announced plans to establish a 1.2 million-square-foot distribution center in Rosenberg, investing approximately $130 million and creating more than 300 new jobs.
- Google’s New Office and Data Center in Texas: As part of its $13 billion investment for new facilities across the U.S., the multinational technology company announced two new developments in the Lone Star State in February 2019.
- ENF Technology in Kyle: South Korea-based ENF Technology announced the creation of its U.S. headquarters and an advanced manufacturing center in Kyle, TX in March 2019, initially creating up to 50 new jobs.
- Amazon in Austin: Global tech giant Amazon announced the addition of 800 new jobs to its Austin tech hub in March 2019, further cementing Central Texas as a leading location for high-tech careers.
- Wagner Tuning in Kilgore: The German auto parts manufacturer revealed its plans for a manufacturing and distribution facility in Kilgore in May 2019, with $6.25 million in total investment.
- Stanley Black & Decker in Fort Worth: In May 2019, Stanley Black & Decker announced a new manufacturing plant in Fort Worth. The Fortune 500 company is slated to build a 425,000-square-foot manufacturing plant in the AllianceTexas development, creating 500 new jobs.
- Steel Dynamics in Corpus Christi: Steel Dynamics will open their next steel mill on a 2,500-acre sorghum field near Sinton, as announced in July 2019. The $1.9 billion project is expected to create about 600 jobs and produce 3 million tons of steel annually.
- Uber in Dallas: In August 2019, global ridesharing app Uber announced its plans to form the largest hub outside of its San Francisco headquarters with a new corporate facility in Dallas. The project broke ground in November 2019 and is expected to create 3,000 new jobs.
- Toyota in San Antonio: Toyota revealed plans for a $391 million expansion of its San Antonio truck assembly plant in September 2019. With this latest expansion, total investment in Toyota Texas exceeds $3 billion.
- Ericsson Inc. in Lewisville: Communication and network equipment manufacturer Ericsson Inc. announced in September 2019 that it will build a new 5G manufacturing facility in Lewisville, creating 400 jobs and $134 million in capital investment.
- Microsoft in Irving: Microsoft announced plans to expand its regional hub in Irving in October 2019, creating 575 new jobs and over $31 million in capital investment.
Bio: Robert Allen is the President & CEO of the Texas Economic Development Corporation (TxEDC), an independently funded and operated 501(c)(3) nonprofit organization responsible for marketing and promoting Texas as a premier business location. Prior to his role at TxEDC, Allen served as the Deputy Chief of Staff to Governor Greg Abbott, working to position Texas as a global leader in economic development.