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Site Selection Advantages Tilt in Favor of Texas

The site selection process usually leads companies to Texas, as evidenced by the top rankings in business development media.

By Melanie Hill on February 7, 2014

When companies search for a new location, they look at numerous factors before making a decision. The availability of the labor pool, the educational attainment level of the workforce, transportation infrastructure, taxes, utilities and many other variables weigh into the equation.
Across the range of corporate location and investment measurements, Texas makes a strong showing. It’s why Area Development magazine rated Texas No. 1 overall on its Top States for Doing Business rankings. The corporate location professionals it surveyed ranked Texas tops for overall business environment, including its cost of doing business, corporate tax environment, incentive programs, speed of permitting, and access to capital and project funding. That combination has given the state a lead in attracting investment and creating jobs.
The accolades highlight the recent successes that Texas has had in attracting companies, says Dean Barber, CEO of Plano-based Barber Business Advisors, which consults with companies considering sites from coast to coast.
“The numbers prove that Texas has been doing relatively better than other parts of the country,” Barber says. “Here in Plano, it’s an exciting growth area. I’m surrounded by corporate headquarters.”
King R. White, president of Dallas-based Site Selection Group LLC agrees that Texas has done well lately in attracting businesses.
“We’re seeing a lot of activity and a resurgence in the manufacturing type of projects,” he says. “Texas does hit the radar for a lot of those companies.”
A recent survey of corporate relocation professionals rated the state in the top five for labor climate, availability of skilled labor, infrastructure and global access, including its logistics and distribution strength and rail and highway access.
Built for Business
Companies can benefit from Texas laws that allow communities to adopt 4A and 4B local sales and use taxes to finance economic development efforts. That gives communities the ability to construct or acquire buildings, upgrade infrastructure and take other steps to accommodate businesses.
“The helps a lot especially on upfront investments,” Barber says. “A lot of economic development organizations in other states don’t have that kind of money.”
The tax structure allows Texas cities to compete on a national scale. The state levies no personal or corporate income taxes, and the Tax Foundation ranked the state in the top 10 on its annual Best States for Business in 2012.
“That gives a lot of leeway for some tertiary markets to compete effectively with other parts of the country for a lot of these projects,” White says.
White says Texas cities compare very favorably against other top locations in the nation for location investment. In terms of labor costs, Texas offers a high-quality workforce at affordable rates. For instance, White noted telecommunications engineers in the Dallas area cost 15 to 20 percent less than people with the same skills in Silicon Valley.
“One of the positive attributes we have is the quality of workforce around the state,” White says. “You can go to a Tier 1 city and find great technical talent and go to a Tier 2 or 3 city and find great skilled industrial labor.”
Other costs of doing business are lower as well. For example, office space in Silicon Valley can be 20 percent to 25 percent higher than most Texas cities, White says.
Texans are ready to go to work, even in industries with which the state does not have a long legacy.
“In most parts of Texas, even if there’s not a strong manufacturing tradition, there is a kind of get-it-done attitude,” Barber says. “It’s the rancher’s attitude that says we may not know how to do it, but we’ll figure it out.”
Texas Measures Up
However, not all aspects of a state can be captured on a spreadsheet.
“There is an emotional aspect to corporate decision making and site selection,” Barber says. “What communities can offer in terms of quality of life can tip it one way or the other for a location.”
Often, it takes a trip to Texas to see the whole picture of what makes the state so attractive.
“There’s the qualitative aspect that happens when people visit the area and see what other employers are saying,” White says. “There’s a major difference when it comes to the friendliness factor of Texas culture and that’s hard to put a price tag on.”

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