World Report

An economic powerhouse, Texas boasts a wealth of hi-tech companies on top of its traditional strengths

t may not be the biggest state in the US, but Texas is still mighty big. Nearly three times the size of Britain, the Lone Star State is one of the most economically impressive in the country.
It has benefited from wealth initially accumulated by the early ranchers and then by becoming the country’s leading oil and gas supplier, but the foundation for the state’s success is what Texas Republican senator Kay Bailey Hutchison describes as its “can do” spirit.

Bailey Hutchison
‘The quality of life that people enjoy here is incomparable’

Texans are supremely confident in their ability to get things done. They like to think of their state, actually the second-largest after Alaska, as “like a whole other country”, which happens to be the latest slogan on their car licence plates.
The essential business of Texas is oil and gas. Houston is the energy capital of the world, as well as being the world’s petrochemical industry capital.
However, the state’s economic complexion has been changing in recent years as more and more hi-tech firms establish themselves there. Indeed, 23 of the fastest-growing technology companies in the US are located in Texas, according to Deloitte & Touche’s annual Technology Fast 500 report.
“The growth of the Texas technology industry continues to be impressive,” says Deloitte & Touche managing partner Sandy Rothe. “Last year, Texas had 15 companies on the list. This year there are 23 and we expect to find many more in future years.”

The highest-ranked Texan company on this year’s list is Plano-based PFSweb Inc, ranked fourth in the US. It provides outsourcing solutions, web-enabled customer contact services management and international distribution services.
Of the 23 Texan firms in the Fast 500, more than half are involved in software and the others in communications, internet services, computers and biotechnology. Fifteen are in the Dallas-Fort Worth area, five in the Houston area and three are based in Austin, the state capital.
Next April, Texas holds its second annual state-wide technology conference. It is expected to attract 300 organisations, twice as many as its predecessor.

Although the US economic downturn has had a significant impact on the sector, the level of interest and participation is undiminished, declares conference chairman Barry Cohen. “As long as there are new technologies rising within the universities and corporations, people will need to talk about their intellectual properties and discover potential market niches for their technologies,” he says.
He adds: “This is an opportunity to take the time to learn about different technologies from companies that are already generating revenue.”
The conference bills itself as an educational symposium serving universities under pressure to commercialise their technologies. For the Texas Medical Center, one of the biggest medical com-plexes in the country, it will be a great opportunity to exchange ideas and new developments in biotechnology, a sector that is showing rapid growth.
Houston mayor Lee Brown says the city’s diverse economy will help to defend it against the downturn in the US, despite locally-based Continental Airline’s plan to lay off thousands. “Houston does not rely on one particular product,” he says.

“We have oil and gas, an impressive port, the medical centre, space and hi-tech industries. That diversity gives Houston an advantage and has helped it maintain a strong economy, even in difficult times.”
The $1.7 billion development project at Houston’s George Bush Intercontinental airport, the headquarters for Continental Airlines, will continue with the building of a new runway and other facilities.
The airport, the 11th busiest in the US, handled 35 million passengers last year. It is in a better position than many other US airports because most of its revenue comes from business travel.
Meanwhile, the economy of Dallas, home to Dallas-Fort Worth international airport – the second-largest in the US in terms of area and third-largest in the world – will depend on the return of consumer confidence. Nevertheless, the authorities are pressing ahead with a $2.6 billion enhancement project, which includes a consolidated international terminal, an automated passenger-transit system and a new hotel.

Although Texas boasts some of the best highways on the continent, travellers continue to demand ever more and better roads. Texas voters have overwhelmingly approved constitutional amendments authorising the sale of $3.5 billion worth of bonds for several state agencies and allowing the state to borrow money to build highways for the first time.
With the money raised from bonds, the creation of the Texas Mobility Fund will allow the state to finance the construction, acquisition and expansion of state highways, and also pay a portion of the cost of public toll roads and other transport projects.

The city’s port is one of the most important in the country, strategically located for the growing trade between Latin America and the US. The passage of the Trade Promotion Authority Bill, for which the Port of Houston Authority (PHA) has lobbied energetically, would generate new economic opportunities.
The port authority is to spend around $1.3 million on the design of the proposed Bayport Terminal Complex. A major change in phase one of the terminal will increase its size from 46 to 65 acres.
In Houston, almost one in three jobs is tied to international trade. Mexico is the top trading partner, with $5.5 billion in annual trade volume. Trade with Venezuela tops $3.2 billion and that with Brazil is about $2.1 billion.

Though based around energy, the economy is busy diversifying

Murray
‘From what I have seen, employers find the tax regime very attractive’

Senator Bailey Hutchison says: “Our state was built by entrepreneurs and the spirit is still here. Although oil and gas will always be part of our heritage, in future we will grow in technology and defence.”
Mrs Bailey Hutchison, whose great-great grandfather signed the Texas Declaration of Independence in 1836 before it joined the Union, was the first woman to represent the state in the US Senate on her election in 1993. “People who come to Texas love it,” she says.
“The quality of life that people enjoy here is incomparable with other cities. We are the second largest state, in both size and population. I like to tease my friends from Alaska that Texas is the largest state in terms of useable space. Alaska is larger in size – but it is largely unuseable space.”
Iain Murray, the British Consul in Houston, adds: “From what I have seen, employers are very satisfied with the quality of the workers and the tax regime is attractive.”