Texas Leads in Foreign Direct Investment Projects
Texas' list of recent foreign direct investment projects is as long as it is deep. More than 1,300 major foreign companies had operations in the state in 2012.
When executives at Kelso Technologies were looking for a plant site in the United States, their search started and stopped at Bonham, Texas.
The Canadian-based maker of pressure relief valves and other products wanted to be closer to its customer base of railroad tank car manufacturers. Kelso CEO James R. Bond says the Vancouver company’s production manager was originally from Bonham and introduced them to the Texas city.
“We became very good friends with the mayor, and the city shared our long-term goals,” Bond says. “It was not a hard decision.”
The decision has also been an easy one for a number of foreign companies that have made Texas their choice for investment and job creation across a range of industries. Between 2008 and 2012, Texas attracted FDI projects from 42 different nations.
During that span, more than 430 non-U.S. companies announced more than 500 separate business expansions in the Lone Star State, creating an estimated 46,000 jobs. Overall, more than 446,000 Texas workers are employed by foreign companies, including Alcatel-Lucent, BASF, Toshiba, Novartis, Royal Dutch Shell and Siemens.
The state’s track record earned it Foreign Direct Investment magazine’s inaugural Governor’s Award in 2012, based on a number of qualitative and quantitative factors.
A Winning Attitude
Texas’ list of recent foreign direct investment successes is as long as it is deep. More than 1,300 major foreign companies had operations in the state in 2012. Nearly one in every four oil, gas or mining projects and one in every nine industrial machinery projects locating in the United States from outside the country went to Texas. Among the recent achievements:
- South Korean semiconductor giant Samsung Electronics launched a $4 billion expansion program in late 2012 at its Austin chip plant to serve demand in the smartphone market. The company, which chose Austin in 1986 for its first manufacturing site outside South Korea has invested more than $13 billion at its 2,400-employee Austin facility since the mid-1990s.
- Steel pipe manufacturer Tenaris will build a $1.3 billion facility in Matagorda County in the heart of the Texas energy belt between Houston and Corpus Christi, creating 600 jobs. The company, headquartered in Luxembourg and a majority-owned subsidiary company of the Italian group Techint, will build a 1 million-square-foot, state-of-the-art seamless pipe mill and heat treatment and premium threading facilities that will produce 600,000 tons of pipe annually. The company’s North American operations are in Houston.
- In Corpus Christi, Austria’s largest steel maker plans a $700 million facility that will use natural gas to reduce iron ore into iron pellets and bricks that are used to make steel. Voestalpine plans to build the plant at a site adjacent to Port Corpus Christi.
- Chinese petrochemical manufacturer Formosa Plastics plans a $1.7 billion expansion at its Point Comfort facility on the Gulf Coast, which is expected to create 200 jobs.
While major foreign direct investments like Samsung and the expansion of Toyota’s truck manufacturing operation in San Antonio grabbed headlines, smaller projects like the Kelso Technologies’ investment were part of the mix as well.
Working with the city of Bonham, Kelso plans to construct a new facility that will expand jobs from 20 to 50 direct employees and another 150 in vendor companies. The new plant is within 400 miles of the company’s customers and major suppliers.
A major factor in the selection was the availability of workers skilled in the heavy industrial production of hazardous materials handling products for the transportation industry.
“There’s a good pool of labor there; they understand the importance of deadlines and the supply chain,” Bond says.
Management at Bigcommerce also liked the business-friendly attitude of Texas. The company’s founders are laid-back Australians who found kindred spirits in the easygoing but hardworking Texas culture, says Steve Donnelly, director of human resource and recruiting for Bigcommerce.
Bigcommerce opened its U.S. presence in Austin in 2009, drawn by the high-tech savvy employee base. The company creates e-commerce solutions for small- and medium-sized businesses to enable them to engage in online commerce. The Austin office originally was devoted to sales and support but will add software developers soon.
“You have great academic institutions that put out fresh talent all the time and you have people who are startup veterans who have been through it before at all levels of the organization,” Donnelly says. “Austin has the sort of talent pool you won’t find everywhere.”
Bigcommerce also looked at other technology centers such as Silicon Valley, but lower costs played a large role in choosing Austin.
“It’s so expensive to be in the area like San Francisco from a municipal tax standpoint and what you pay for the same skill set makes a huge difference,” Donnelly says.
Support From the Top
Samsung Austin Semiconductor selected the site for its first Texas chip fabrication plant in 1986 because the city was home to other companies in the industry. In its latest expansion, the company will hire an additional 500 employees.
Samsung chose to invest in the Austin facility because of its track record with the city and the state.
“We’ve been successful recruiting employees, and we have a great partnership with the city of Austin, the county and the state,” says Catherine Morse, general counsel and director of public affairs for Samsung Austin Semiconductor. “The state realizes we could have built anywhere in the world and we have chosen to expand in Austin,” says Morse “And the governor has really expressed his appreciation.”