Las Vegas has a slogan that says “What happens in Vegas, stays in Vegas.” Such an approach might be a way to encourage some people to do things they might not ordinarily do at home, and it might make good economic sense for the Las Vegas community. However, it tends to ignore the basic principle that once something is put into motion, its impact can be very far reaching and expand way beyond the region where the initial activity occurred.
I’m not referring to any of the various kinds of activities that may take place in the city that never sleeps. Rather, I’m talking “economic-ese,” if there is such a word. After all, I’m an economist, and I look at practically everything through the lens of dollars and sense (pun intended).
Sometimes, that which happens in one portion of Texas can have a significant impact on the lives of those living hundreds of miles away. As an example, let’s look at the cheese manufacturing facility that is planned for the northwestern corner of the Texas Panhandle in Dalhart.
The Panhandle is a national center for agricultural activity. Additional development in this area will play an important role in the future economic growth for the region. The new cheese manufacturing operation will certainly be a major catalyst in reshaping the economic future of a substantial segment of the Panhandle and helping create a viable industrial cluster to promote sustainable prosperity. It will also aid in securing the area’s position as a center for food processing and other activities that can build on the existing agricultural base. In particular, it is likely to spawn a massive infusion of dairy operations.
These various entities will generate hundreds of millions of dollars in economic activity each year, much of which will occur in Amarillo because it is the economic “hub” of the area. In addition, the cheese making facility and related operations will significantly enhance the overall economy of the state.
The new cheese plant involves a total investment of some $280 million for development and construction, along with acquisition of equipment during the next seven years. At maturity, operations are anticipated to add 300 net new direct jobs with an annual payroll of some $10 million. Over time, dairy operations that would probably locate in the region could contribute an additional 2,400 jobs. Moreover, the multiplier effect for this region will be quite impressive as the area has the resources necessary to support future agricultural and food processing endeavors.
Looking at the first year of operations at the cheese manufacturing facility and associated dairies, local fiscal revenues are forecast to amount to $3.46 million. Total state fiscal revenues will likely be some $11.32 million as a result. The total effect of operations at maturity is anticipated to be $13.66 million for the Panhandle Region and approximately $44.77 million across the state.
After full operations get underway, the total number of permanent workers in the other businesses associated with the Panhandle cheese manufacturing facilities are forecast to number around 11,050. Across the state, projections call for another 1,640 permanent jobs to be created.
The thing that makes this location unique is the fact that the Amarillo Economic Development Corporation provided significant incentives to secure this location, despite the fact that the direct activity occurs elsewhere in the region. This decision was a wise one indeed, recognizing that, as the center of much of the activity in the Panhandle, Amarillo would enjoy substantial benefits. You don’t see this type of cooperation and recognition of the “big picture” very often, and it is refreshing when you do.
Because Texas is such an expansive state, we sometimes tend to forget the economic impact that major businesses can have outside the area where they are physically located. Although the cheese manufacturing facility is in Dalhart, the economic benefits will be felt in Amarillo and far beyond.
The motto of the Three Musketeers was “One for all, and all for one.” It could well be a fitting motto for Texans, as predictions relating to the cheese manufacturing operations in Dalhart show, what happens in one area can have a far-reaching impact. The truth of this statement is evident as the new cheese making facilities will undoubtedly be a catalyst for the further strengthening of the economy of not only the Panhandle, but also that of the Lone Star State. Amarillo will be a major beneficiary, and local officials are to be commended for their foresight and leadership. As we face intense competition for new activity throughout Texas, the lesson from this experience could prove to be vital.