The Future is Texas

“The future is Texas. If you want to see where America is heading, start by studying Texas. “ --The Economist

In 1901, mining engineer Captain A. F. Lucas drilled an oil gusher at Spindletop, catapulting Texas into the petroleum age and making it the leading oil producing and refining state in the Union. Driving across Texas’ vast countryside in the early 1900s, there was cattle, cotton and oil as far as the eye could see. In 1932, Elmer Doolin of San Antonio borrowed $100 to start an entirely new industry—manufacturing corn chips. The company later became known as Frito-Lay, the country’s leading snack food company, today worth over $29 billion. Along with the farmers, ranchers and oil men, those with dreams of new products and technologies found that Texas is ready and willing to participate in the global marketplace.

Today, Texas is a meld of all of these people—the ranchers and the business owners; the farmers and the scientists. “Texas was built on the dreams of entrepreneurs and adventurers who dared to chart their own path to success,” said Governor Rick Perry. “That’s still true today. With developed infrastructure, outstanding education and research resources, a skilled workforce and low taxes, Texas is a haven for businesses that use the resources of human innovation to make the impossible possible. Some might call that our state’s renegade spirit, but we call it the way progress is made.”

Texas is huge—not just in size, but in spirit. Long known for its cattle filled plains, cotton fields and oil fields, Texas’ uniqueness as a 21st century business center comes from the unexpected: a high-tech sector that rivals Silicon Valley; a vibrant biosciences sector growing amidst renowned medical centers and research universities; dynamic international commerce; and a state government that helps rather than hinders business.

Success Factors

Size

Texas is the second-most-populous state after California, and the second-fastest-growing state after Florida, doubling the population since 1960. Wide-open spaces and reasonable regulations have made Texas a business magnet. Corporate giants such as American Airlines, J.C. Penney, Dell, EDS and Texas Instruments, all have their headquarters in Texas.

State Government

Texas State government supports business growth through legislation. Becauseof this, the Lone Star State has an excellent business climate. Texas is a right-to-work state, and we have enacted tort reforms to bring fairness and balance to our civil justice system and major reforms to improve the state workers’ compensation system. Texas has no personal income tax, and has one of the lowest tax burdens in the nation, ranking 49th among the 50 states in per capita state taxes in 2000.

The State of Texas offers a variety of incentive programs designed to make capital more available for businesses looking to expand or locate in the state, as well as for companies already doing business in Texas. Committed to retaining its “business friendly” reputation, Texas stands ready to help businesses expand, and become globally competitive.

Education

Texas leads the nation in higher education. Ninety-eight percent of the Texas population lives within 50 miles of an institution of higher education. The state has 31 public four-year universities, including the University of Texas and Texas A&M University, two of the largest universities in the nation. Texas is also home to four public two-year upper-division universities and centers, 50 public community college districts, four technical college campuses, eight medical schools and health science centers, and a marine resources school. These facilities make up an unrivaled public higher education system. Beyond the public system, Texas is home to 37 private colleges and universities, two junior colleges, and a medical school.

Nearly half of the Texas labor force has a college degree or some college education. More than one million Texans in the labor force have attained four-year college degrees and more than a half million attained specialization. The National Science Foundation reports that Texas universities produce the nation’s third-highest number of scientists and the second-highest number of engineers, meaning that Texas’ knowledge-based companies have never had to look far for talent.

Infrastructure

Texas has one of the nation’s most extensive air transport systems. Texas has 27 airports in 24 cities offering scheduled daily passenger service. Forty railroads operate on almost 12,000 miles of track in Texas and over 300 million tons of freight is shipped by rail throughout the state eachyear. With five gateways into Mexico, Texas offers unsurpassed railway access to Mexico’s industrial north and its populous central plateau. Texas has over 300,000 miles of public roads—more than anyother state. Texas is also located on the main trade route between Mexico and Canada and has more international highway border crossings than any other state. The 29 seaports located along the Texas Gulf Coast handle over 406 million tons of cargo per year. Thirteen of Texas’ ports are deep-water ports with channels at least 30 feet deep.

The state’s geographic location offers severalkey advantages; its Central Time Zone position makes both coasts readily accessible and the predominantly warm climate minimizes wintertime interruptions of transportation.

Energy

Texas has seen 56 new power plants built since 1995. Another 11 are currently under constructionand 16 more are in the planning stages. According to the U.S. Department of Energy’s State Energy Price and Expenditure Report released in 2001, Texas ranks fifth lowest in the nation with total energy costs of $6.65 per million BTU. Compared to California’s $9.37, Arizona’s $11.23 and the U.S. average of $8.41, this makes Texas attractive to the bottom line of any company.

Workforce

The civilian labor force in Texas is the second largest in the nation—over 10 million. According the Texas Comptroller’s Office, the state is home to the second largest techworkforce, with 592,000 high-tech workers adding 177,000 jobs between 1990 and 2002. More than 2.2 million jobs were added in Texas over the past ten years.

International Trade

Texas exports have increased substantially over the years, nearly quadrupling since 1987. Prior to 2001, Texas exports experienced 14 consecutive years of increased growth. In 2002, Texas surpassed California to become America’s top exporting state. According to new data from the U.S. Department of Commerce, Texas exports totaled $95 billion—up slightly over the previous year—and now account for over 13 percent of total U.S. exports. Texas’ top export markets are Mexico and Canada, the United States’ partners in the North American Free Trade Agreement. Other leading markets include Taiwan, Japan and Singapore. China posted a 26 percent increase in their purchases of Texas products and the Philippines posted a 19 percent increase. The United Kingdom was the top European market. Electric machinery and industrial machinery, including computers are Texas’ top export commodities, accounting for almost 50 percent of the state’s total exports. Other top export sectors were plastics, organic chemicals and vehicles and parts.

Real Estate

For expanding or relocating companies, real estate availability and cost—not to mention costs for new construction—are among the most important considerations for site selectors. The August 2002 issue of Expansion Management magazine listed five Texas cities in their “Top 40 Real Estate Markets for Expanding or Relocating Companies” survey, with three in the top 10 and El Paso listed as number one. San Antonio came in fifth, Dallas-Fort Worth came in eighth, Austin was 21 and Houston ranked 26.Chances are, if you are looking for industrial or office space, for the right price to open your new manufacturing facility, bio-tech lab, distribution center or whatever else you can think of, Texaswill have what you are looking for.

Industries

Texas has a long history as a fertile ground for industry. Traditionally, agriculture and energy carried the state’s economy. While still strong, these industries now share the economic spotlight with high-tech, telecommunications, and bioscience firms. Because of our size, we have a highly diverse economy, and companies in many industries feel at home in Texas.

Biotechnology

One of the state’s fastest-growing industries is biosciences, which builds upon the work being doneat Texas’ premier research institutions. Companies specialized in healthcare technology have grown up around the Texas Medical Center and M.D. Anderson Cancer Center in Houston. Agricultural biotechnology research thrives at the state’s universities, most notably Texas A&M and Texas Tech.

Governor Rick Perry is committed to the biotechnology industry, formalized by the creation ofthe Governor’s Council on Science and Biotechnology Development. His goal is to create a seamless system of discovery, innovation and commercialization, taking ideas from the laboratory to the marketplace. Already, one out of every 14 life science occupations in the U.S. is in Texas. Texas colleges and universities spend over $1.2 billion on research and development. Underscoring the dynamism of this industry, Texas biotech companies received $163 million in venture capital in 2001.

Automotive Manufacturing

Automobile manufacturing is a growing industry sector in Texas.

In February 2003, Toyota announced that it had chosen a 2000-acre site in San Antonio to build its sixth North American vehicle assembly plant. Toyota Motor Manufacturing, Texas, Inc. will build approximately 150,000 Tundra full size pick-ups annually, beginning in 2006. Production at the San Antonio plant will supplement the Tundra production at Toyota Motor Manufacturing, Indiana, Inc. (TMMI), which is currently the exclusive manufacturer of this model. The new plant will represent an $800 million investment by Toyota and is expected to bring approximately 2,000 new jobs to Texas and indirectly create jobs for many more.

“Opportunities like Toyota are the Holy Grail of economic development,” Jeff Moseley, Texas Economic Development executive directorsaid. “They come along rarely and, when they do, competition is ferocious. We immediately recognized how important this could be for Texas.”

The Texas motor vehicle and motor vehicle equipment manufacturing sector boasts more than 500 establishments and employs over 27,700 workers in the state. The industry comprises General Motors Corp., Peterbilt Motors Co., Elcom, Inc., Sanden International, Inc., and Stewart & Stevenson Services, Inc.

Aerospace

Home of NASA, the Texas aerospace industry is a critical component of the state’s economy. Texas is dedicated to the continuing development of the aviation and space industries throughout the state. The aerospace industry has more than 214 establishments that manufacture complete aircraft, missiles or space vehicles; aerospace engines, propulsion units or parts; aircraft conversion; and complete aircraft or propulsion systems overhaul and rebuilding. The industry employs over 43,500 people and includes employers such as Bell Helicopter Textron, L-3 Communications, Dee Howard Aircraft andBoeing.

Johnson Space Center was established in 1961 as the Manned Spacecraft Center. In 1973, the Center was renamed in honor of the late president and Texas native, Lyndon B. Johnson. The Johnson Space Center serves as the lead NASA center for the International Space Station—a U.S.-led collaborative effort of 16 nations, and the largest, most powerful human facility to ever operate in space. The center’s famed Mission Control Center has been the operational hub of every American human space mission since Gemini IV. They manage all activity onboard the space station and direct allspace shuttle missions. Johnson Space Center is also home to the NASA astronaut corps, and is responsible for training space explorers from the United States and our space station partner nations. The center leads NASA’s flight-related scientific and medical research efforts and strives to make revolutionary discoveries and advance to benefit all humankind.

The nation’s armed forces recognize Texas’ advance technology and manufacturing strength. The next-generation Joint Strike Fighter jets, which represent the Pentagon’s largest-ever contract, are being manufactured in Lockheed’sFort Worth facility. The System Development and Demonstration phase of the F-35 JSF program started with the signing of the SDD contract in October 2001. Delivery of the aircraft is scheduled to begin in 2008. The program is slated to produce a total of 3,002 aircraft for the United States’ and United Kingdom’s armed forces.

Some of the state’s long-established business sectors also depend on high-tech brainpower. Houston, long-recognized as the nation’s energy capital, has developed a large software industry to support oil and gas exploration.

Texas is a great state with a lot to offer. We have the right combination of premier research and educational institutions, specialized labor and capital to make industry succeed. If someone explored all 267,000 miles of it,from El Paso to Texarkana and from Dalhart to Brownsville, they would discover that Texas is truly a modern day economic success story.