Farmacy

Dec 9 2017

Economic snapshot: Is Texas the new California? #pharmaceutical #industry #marketing

#pharmaceutical companies in dallas tx

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$6.47 billion investment in Texas

Note: The Texas totals of jobs and investments from California companies are conservative estimates because so few companies provided that data.

Texas most recent big deal was Toyota Motor Corp. s decision to relocate its North American headquarters in Plano, generating roughly 4,000 jobs and $350 million in investments. Vranich estimates 3,000 of those jobs will come from California.

This report echoes what businesses that relocate to Texas continue to say they are sick and tired of being over-taxed and over-regulated and are making the economically sensible choice to move to Texas, said John Wittman, deputy press secretary for Texas Gov. Greg Abbott s Office.

All of the corporate moves in the report came under Abbott’s predecessor, Rick Perry, who was aggressive in recruiting companies from California and other states. Abbott, who took office in January.

Gov. Abbott will go anywhere, including California, to bring businesses and jobs to the Lone Star State, Wittman said.

Texas state and city officials for years have touted the state s more business-friendly environment, citing its fewer business regulations and lower labor costs, partly because Texas is a right to work state.

California, on the other hand, is one of the costliest states in which to do business, with expenses 20 percent to 35 percent higher than other states, Vranich says.

Texas is an easier place in which to conduct a business, said Vranich, president of Spectrum Location Solutions in Irvine, Calif. Why is that so? A lot of people think it s taxes, but in my view the No. 1 benefit is an easier regulatory environment. California s regulatory regime is so harsh that it causes companies to look at all kinds of states to go to. For example, if there s an error on a paycheck stub, an employer can be fined.

Corporate migration peaked in 2011

California s corporate losses peaked at 302 in 2011, the same year that Texas gains from that state peaked at 47, or about 16 percent. In 2014, California lost 218 companies and Texas gained 41, or nearly 19 percent.

Vranich didn t have estimates for this year, but said the trend continues.

California has lost more corporate headquarters, engineering firms and support services/call centers in the seven-year period. The state also lost more manufacturers; pharmaceutical and health care companies, and e-commerce, digital and online security firms than other industries.

Texas cities dominate

Of all U.S. metro areas from 2008-14, Austin received the most companies fleeing California (99 companies) and Dallas-Fort Worth was second (68). San Antonio tied with Salt Lake City for 10th place (16).

We have historically been an area where there are great competitive advantages for our location vs. theirs, Sally Bane, executive director of the Plano Economic Development Board, said about California cities. The opportunity to advance your business at a greater pace is certainly a concern in those locations vs. Texas.

Plano landed Toyota last year and a 1,000-job commitment from LoanDepot.com jobs in 2013.

Other states chasing Texas

California saw most of its departures from the southern part of the state and the middle of the state from the San Francisco Bay area straight across the Central Valley into what s called Gold Country.

Of all U.S. cities, Austin was No. 1, gaining 86 California corporate sites or expansions. Dallas ranked sixth (20 companies), San Antonio was No. 8 (16), Houston was No. 11 (11), Plano and Irving tied with Hillsboro, Ore. for No. 13 (9) and Fort Worth tied with Tempe, Ariz. for No. 14 (8).

Select a numbered tab to read company profiles:

In 2014, Active Network moved its headquarters from San Diego to downtown Dallas in one of North Texas biggest recent deals. The cloud-based software company is expected to generate 1,000 jobs and $13 million in investment. After an extensive search, it chose Dallas to centralize its operations and to be able to recruit and retain future employees as the company continues to grow, CEO Darko Dejanovic said in a statement. The average salary of its Dallas employees will be $60,000, according to documents filed with the city of Dallas. The Texas Enterprise Fund offered $8.6 million in incentives. The city of Dallas also offered an incentive. Vista Equity Partners, a private equity firm with offices in Austin and San Francisco, owns the company.

LoanDepot.com based in Foothill Ranch, Calif. announced plans in March 2013 to open a joint headquarters in Plano with over 500 employees. When the mortgage lender moved in three months later, its estimate had grown to 1,000 people within three years. CEO Anthony Hsieh told The Dallas Morning News that he was attracted to the area s availability and skill level of the workforce combined with a business-friendly environment and favorable tax rates. LoanDepot also has operations in Scottsdale and near Nashville.

In 2014, Charles Schwab Corp. picked El Paso for a new operations center that will create 445 jobs and represent $21.5 million in investments over 10 years. The financial services firm also said it would expand its Austin branch office, adding more than 800 high-paying jobs and building a new $200 million campus. The Texas Enterprise Fund provided up to $5.95 million in incentives for job creation in those two cities. The company looked at North Texas then and liked it enough to announce a new operations center in Westlake in November. Schwab officials over the last few years have grumbled about the high taxes and high cost of doing business in California. The company also recently opened a $230, million, 2,000-employee campus in the Denver area.

The flow of companies and people is a major economic boon.

The migration of people and firms has been a key underpinning of the Texas economy, Robert Kaplan, president of the Federal Reserve Bank of Dallas said in a recent public speech. Over the past several years, many foreign and domestic companies have moved their operations to the state and many others are considering moving to Texas. Since 2000, the average rate of population growth has been almost a full 1 percentage point higher in Texas than in the U.S. as a whole. I would expect this trend to continue over the next several years.

Other states also have taken notice of Texas gains. Florida Gov. Rick Scott last week told state legislators twice in a speech that the state should follow Texas to diversity its economy and create jobs.

What they have done is figure out how to diversify their economy, said Scott, who has proposed over $1 billion in tax cuts aimed mainly at businesses. They went after corporate office moves. They got companies like J.C. Penny and Exxon and others to move.

Joe Vranich is president of Spectrum Location Solutions, a site selection consulting firm based in Irvine, Calif. He wrote the book, Supertrains, and is a long-time advocate of high-speed rail. He also is a former public affairs executive for Amtrak, National Association of Railroad Passengers and the aerospace industry.

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