A few months ago, we at The Perryman Group took a good, hard look at the Lone Star State’s economic development prospects. We reviewed workforce conditions, industrial composition, natural resources, infrastructure, and many other factors affecting the path of growth in business activity. This endeavor was part of a much larger (some might say too much larger) study, which we’ll be happy to share with you if you give us a call or drop us an email. One of the key questions we were looking to answer was how to maximize the “bang for the buck” in the arena of the state’s expenditure of scarce budget dollars on industrial recruitment.
Bringing in new businesses (and keeping existing ones) can be very challenging, particularly in a sluggish economy. In order to effectively utilize state resources for maximum impact, strategies should be focused toward clusters of production where Texas is presently competitive or has definitive prospects for success. Our analysis identified fifteen such segments, although these will change over time as new market conditions and technologies surface.
While any viable prospects for desirable activity should certainly be vigorously pursued, the industrial recruitment process must be focused. The rationale is simply that resources are limited and must be deployed in a manner to optimize prospects for success. The process of identifying appropriate targets involves (1) extensive empirical analysis to determine the resources and linkages which point to probable success and (2) detailed industrial evaluation to access those sectors with sufficient growth potential to merit recruitment. In order to be a viable candidate for long-term expansion, a sector must be characterized by both an appropriate match with the structure and resources of Texas and at least moderate prospects for new and expanded facilities.
Although the clusters described in the full study are not the only areas of potential growth, they represent sectors which offer the best promise of success. When developing marketing strategies, attending trade shows, planning international trade missions, or visiting key corporations, it is helpful to focus on the industries offering genuine opportunities. It can also help to pursue regional development strategies because they are often superior to purely local ones; the Council of Governments areas are remarkably well defined and institutionally suited to this purpose.
A few industries, such as tourism, represent viable targets for virtually all parts of Texas. Others (such as distribution, transportation, and logistics or information services) are a good bet for almost every region. The applied technology, corporate headquarters, and business services clusters are generally only good prospects for the state’s largest metro areas, though it’s important to note that different cities are better suited for some sectors than others.
Energy, production support manufacturing, and agriculture and foods are good fits for portions of most regions; heavy construction and transportation equipment each match up well with a spectrum of areas. On the other hand, the requirements of the emerging biotechnology and medical, as well as emerging nanotechnology and materials clusters are only suited to specific areas, primarily those with larger cities, concentrations of research facilities, major universities, or healthcare complexes.
There just isn’t enough space here to get into a lengthy description of the industries, nor can I tell you all I’d like to about which clusters fit each region. Suffice it to say that the great state of Texas is a vast space. Different areas have unique characteristics, from workforce to industrial base to higher education facilities to natural resources and then some. No cookie cutter plan will work across the board.
To maximize the returns on our economic development investments, it is imperative to look to those industries where we have the right linkages. It’s also wise to work on prospects in growing industries. However, just because an industry is in the headlines doesn’t make it a good bet everywhere. A successful industrial recruitment strategy begins with a thoughtful analysis of which types of firms are most likely to be recruitable. While the State must do some things to make us competitive, economic development is ultimately a local, focused endeavor.