Because companies need to know about future opportunities and economic developers nationwide should be aware of their competition, let me tell you what’s happening here in Texas where I live.
For the first time in a long time, the Texas economy, the 14th largest economy in the world, shows signs of sputtering. Don’t get me wrong, there will continue to be job growth, but it will be dampened at least in certain parts of the state.
That is because in communities largely dependent on oil and gas, there have been layoffs and even business closures. And it’s all because of depressed energy prices.
What’s good for you and me at the pump, is not so good for the industry and some local economies.
A Sobering Indication
Job growth in Texas in 2015 is projected to be 1 or 2 percent, lower than the national average for the first time since 2003. And last month, Texas posted its first monthly decline in total jobs in more than four years, a sobering indication of what slower growth looks like.
But the good news is that Texas will weather this storm, because its economy is now quite diverse and no longer as dependent on the oil and gas industry as it once was. Still, with depressed prices and hundreds of rigs having been idled, it’s having an effect.
Manufacturers of parts used in drilling, as well as hotels and restaurants that cater to the oilfield workers in Texas, North Dakota, Ohio and other states, are also feeling the impact of lower oil prices.
A New Governor
Texas has a new governor in Greg Abbott. He is of the belief that the best job creation program is tax reduction, a premise that I generally agree with.
Now I thought this new governor might be some Tea Party kook. Being a centrist on matters of politics, I am generally wary of extremists, right or left.
But during a conference call a few weeks ago in which site selection consultants were introduced to him, I found Gov. Abbott to be quite mainstream and reasonable.
And even better, he seems to be a champion for economic development and offered up some real substantive ideas on how to improve Texas’s competitive position in attracting business investment..
The Texas Enterprise Fund Gets Bolstered
For one thing, he is going to increase funding to the Texas Enterprise Fund by the tune of $50 million. Now that is significant as there was some speculations that the TEF could be eliminated.
As of Dec. 2014, the Enterprise fund started in 2004 had awarded $576.2 million to 129 projects (corporate expansions) resulting in $24.39 billion in investment.
Gov. Abbott is also pledging to reduce business taxes and fees by $1 billion a year while increasing spending on roads and transportation by $4 billion. Now I’m not sure how that’s precisely going to work, but press reports indicate that the House and Senate are largely going along with that.
Targeting the Franchise Tax
Music to my ears is the fact that Abbott wants to reduce property taxes and eventually eliminate the state’s franchise tax. He cites a study that showed that eliminating the franchise tax in Texas would generate 41,500 new jobs, $3.4 billion in new net investments and $9.8 billion in new personal disposable income by 2017.
“While we are fortunate in Texas to not pay a personal income tax, we are paying as consumers and employees when it comes to the business franchise tax. Every dollar paid in business franchise taxes could instead be invested in higher wages or new jobs,” Abbott wrote earlier this month.
“To keep Texas the best state for business and job growth, the state must significantly reduce and eventually phase out the business franchise tax. This reduction in the franchise tax will help attract even more job creators and encourage even more Texas entrepreneurs to invest their capital in opening or growing a business.”
Many governors talk about economic development and some actually do something about it. It’s still early, but judging from what I’m hearing, Abbott appears to be a doer.
My Point Is …
I’ve played cards in England and I’ve gambled in Spain. And along with my ramblings I’ve met some big names.There’s been governors, senators, congressmen and such. Singers, actors,artists,and writers of much. I’ve hobnobbed with preachers, judges and crooks. And professors whose knowledge have all come from books. Now some of these people have impressed me a lot, and some of these people I can truly say not.
Please accept my apology for this poor attempt at poetry. If I have a point, and I think I do, it is that I have met a pretty wide group of people, some of whom are “famous” and some of whom are not.
But it is the entrepreneurs who generally impressed me the most.
A Man with a Plan
I met one such entrepreneur this past week. You may have heard of him — Emmitt Smith. Shoot, even my wife, who has no interest in sports, has heard of him.
To re jog your memory, Emmitt is a former Dallas Cowboy and widely considered to be one of the premiere running backs to have ever played the game.
I remember him when he was at the University of Florida and just shredding, just tearing apart my beloved Alabama defense. I knew then that he was destined for the National Football League.
And in the NFL, he did the same thing, shredding defenses, including that of my beloved Pittsburgh Steelers. His 18,355 lifetime rushing yards still stands as a NFL record.
But being a legend on the football field only gets you so far, and Emmitt well before he left the game, started planning for his future.
Today Emmitt heads a commercial real estate services company, E. Smith Realty Partners, and has surrounded himself with some topnotch talent that is doing work nationwide.
Smith is one of a growing number of former professional athletes pursuing second careers in commercial real estate. They include ex-Red Sox slugger Mo Vaughn, former tennis champion Andre Agassi, one-time New York Jets wide receiver Keyshawn Johnson, ex-Los Angeles Laker Shaquille O’Neal and Basketball Hall of Fame member Magic Johnson
He Knows His Stuff
We talked about the booming North Dallas corridor and the big projects happening there – Toyota’s North America headquarters, Nebraska Furniture Mart and “The Star in Frisco,” a 91-acre mixed-use project that will include Dallas Cowboy’s new headquarters and training facilities .
We talked about the vast amount of property available to the south of Dallas, which should be ideal for manufacturing and distribution because of all the multiple interstates nearby.
We talked about Fort Worth’s great walkable downtown, compared to that of Dallas, and how the Trinity River Basin could be used to bring the two cities, where historic rivalries have existed, closer together.
And we talked about how the availability of water could be critical to future growth for the Metroplex, the common vernacular for the Dallas-Fort Worth area. See last week’s blog – It’s a Different World.
On these issues and more, he spoke with a degree of authority that made me understand that this fella knew his stuff.
No “Were” About It
When I was first introduced to Emmitt, courtesy of economic developers from Virginia Beach, Va., I was caught by surprise and stammered, rather stupidly, “Man, you were just great!”
Without missing a beat and with a smile, he said, “So I’m not now? You know I’m not done.”
No, he is far from done.
Emmitt’s story should play out much like that of Roger Staubach, the former Dallas Cowboy quarterback who built a successful real estate development company and then sold it to Jones Lang LaSalle for far more money than he ever made in football. Emmitt is following that same playbook.
So watch Emmitt, and his company, run. He’ll be shredding some defenses along the way.
I’ll see you down the road.
Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Plano, Texas. Dean can be reached at email@example.com or at 972-767-9518. If you liked what you read here, invite him to speak at your next meeting.