Monthly Archives: November 2017

The fight is on in Texas and across the country for what the ubiquitous corporate giant Amazon is calling HQ2 — its 2nd corporate headquarters in the U.S.

And the purse will be enormous: about $5 billion in capital investment and 50,000 jobs with a six-figure average salary.  Add to that the potential to ‘cluster’ related technology jobs and it’s easy to see the reason for the frenzy.

Austin, Greater Dallas, El Paso, Frisco and Houston have submitted proposals;  Amazon is expected to make a decision in the 1st Q of 2018.

So.. what are the prospects for Texas in this competition for an economic whale?

Some are touting the Texas connections of founder Jeff Bezos. He spent his childhood in Houston while his dad worked for Exxon and his cousin is George Strait, who you may have heard sing some country and western tunes.

And..  Amazon already has about 20,000 employees in Texas who, we trust, can attest to the wonderfulness of the Lone Star State.

But in fact it’s mostly a business decision.

Attributes like workforce size and skill, location, and essential infrastructure will decide it, along with the tax and regulatory environment, economic development incentives, and workforce training and education.   Quality of life and other cultural and recreational amenities will be considered along with affordable housing, cost of living and the quality of the public schools.

Amazon’s RFP says, “the project requires a compatible cultural and community environment for its long-term success. This includes the presence of a diverse population, excellent institutions of higher education, local government structure and elected officials eager and willing to work with the company..”

This is likely the template for future large corporate expansions and re-locations and Texas generally stacks up well.

As we look ahead.. business and elected leaders are preparing for Texas’ future through emphasis on skills-based education and workforce development, infrastructure capacity (physical and virtual assets), ‘smart cities,’ access to capital for entrepreneurs, and tools (read: incentives) to stay competitive.

Texas will have stiff competition from other cities and sealing the deal will almost certainly include incentives and require a collaborative state-local effort.

In Texas that will include a package that includes the Texas Enterprise Fund (Governor Abbott) and local tax abatement and of course our pro-business, pro-growth policy climate.

The opening bell has rung on the Amazon deal.

How will this battle end?  Starting with a strong team led by Governor Abbott and great professionals throughout the regional and local economic development ecosystem, Texas has done it before and is well-positioned to do it again.

We can only hope Mr. Bezos doesn’t have any exes here.

The Texas Select Committee on Economic Competitiveness is meeting this week in Austin to “develop and present concrete principles on long-term competitiveness and economic development issues.”

The hearing will examine important factors for companies looking to re-locate to Texas or expand and add jobs here.

House Speaker Joe Straus has explained that two recent events were the catalyst for the Committee:  Hurricane Harvey and its billions of dollars in damage to Texas;  And, Amazon’s pursuit of a 2nd U.S. HQ offering value on a level that might negate Harvey’s damage.

Why is this important?  Texas is slipping – slightly – in economic development rankings.  We’ve fallen to #4 in the CNBC “best states for business” rankings, the first time in 11 years we haven’t been #1 or 2.  Granted, a major factor is falling oil and gas prices.. We remain # 1 in the country for workforce and infrastructure.

Many acknowledge our inherent advantages:  our natural resources in the energy space (oil and gas particularly of course , and now even wind and solar) and our people and that intangible –  entrepreneurial spirit.

But we’ve also done a great job of maintaining a pro-growth policy climate that includes reasonable regulations and relatively low taxes.

As the Speaker’s proclamation notes, Texas needs to make sure our approach to economic development over the long-term is appropriate for the private sector’s changing needs and demands in a global economy that is increasingly competitive.

The Committee will be exploring these areas:

  • Education and workforce development to ensure Texans and their employers have access to skilled workers
  • Infrastructure, including transportation, energy, water, utility and broadband to make sure we have the capacity to accommodate economic growth
  • Access to investment capital to help our young companies grow and stay in TX
  • Investments in innovation across the board (and including unnecessary regulations that would impede economic growth)
  • Existing and potential economic tools (read: incentives) to compete for and retain jobs
  • Tools and authority of local governments to attract new jobs
  • Look at examples of successful and unsuccessful attempts to attract companies to TX – what worked and what didn’t

Major Texas business interests are engaged in this effort.  A group called “Texas 2050” is looking closely at how Texas remains the best place for business and families for at least the next 30 years.

Here’s a fun fact: Texas needs to create 7.8 million new jobs by our bicentennial birthday (2036) to keep up with population growth. Wow..

Can we do it?  With a long-term, smart approach, of course.

The Select Committee meets next on Dec. 5 and is expected to issue a report with recommendations on Dec. 12.

Oh, and a shout-out to Dallas Mavericks owner and adopted Texan Mark Cuban who testified today and coined the “Destination for Excellence” phrase.  I am merely borrowing, which I hope he doesn’t mind. As an Arlington native I am, after all, a Mavericks fan.

For more information find me at Quorum Public Affairs or #ccquorum on Twitter.

Craig Casselberry