COVER STORY, APRIL 2006

MAKING BUSINESS BOOM
Three economic development groups reveal how they attract and retain business in their communities.
Leah Sanders

When a city finds a way to enhance its current features and market its benefits, big companies pay attention. Economic development groups have become creative in the ways they reach out to bring in new growth. They do everything from marketing tax incentives and local training programs to building new business parks and traveling to other cities to meet potential clients. Texas Real Estate Business recently spoke with leaders in Tyler, Lubbock and Victoria, Texas, to discover their strategies for economic growth. These three cities have plans, and they are pushing ahead.

Tyler Economic Development Council

The Tyler Economic Development Council is a privately funded economic development group in Tyler, Texas (above). The city has a 100,000-person workforce that also draws from communities around Tyler.

“Our goal is to diversify the economy by working with primary companies, which we define as ones that sell at least 50 percent of their business services outside of the 14-county region of East Texas,” says Tom Mullins, president and CEO of Tyler Economic Development Council. “The key thing is, no matter what the business is — it can be big or small, two people or 2,000 people — it has to be a primary employer. It has to be trading outside of our geographic region and bringing new dollars into our economy.”

Tyler is already home to several large primary employers, including two of the world’s largest air conditioning manufacturers. Trane has its residential-unit national headquarters and its national research and development division in Tyler. Carrier Air Conditioning has closed two plants in Tennessee in the past few years and moved much of that operation to Tyler. In fact, the company recently completed a $20 million plant upgrade, adding 225 new employees. It now employs 1,100 people. 

These companies are doing precisely what Mullins sees as helpful to Tyler’s economy. “They make air-conditioning products, and they makes thousands of them a day, put them on trucks and ship them all over the country. Those products then bring new money back to us,” says Mullins. He adds that the companies provide jobs to people who then put money back into the economy through use of services such as hospitals and schools. “They affect every other sector of the economy, and that’s the way the money flows through the economy. It’s a multiplier effect,” he says.

John Soules Foods, the largest processor of pre-cooked fajita meats in the United States, is also strengthening Tyler’s economy. With 300 employees currently, the company is nearly finished with a $30 million expansion project that will add another 100 jobs. 

The Tyler Economic Development Council has a four-part strategy for attaining its goal of diversifying the economy by working with primary employers. It works to retain and expand existing industry, aid small companies in start-up and growth, market Tyler to companies looking at Texas for investments and employ incentives at both the state and local level to compete for new companies.

As a mid-sized city of 101,000 people and with surrounding small communities bringing the population figure to approximately 200,000, Tyler has a 100,000-person workforce with a 4.1 percent unemployment rate. It pulls in people from 30 to 40 miles around for employment, and both the service and retail sectors provide large numbers of jobs.

The city of Tyler is also the only other city besides Dallas and San Antonio that has two branches of the University of Texas. The medical branch has a biomedical research center and provides about 1,300 jobs. The Tyler academic branch is home to an engineering school that has mechanical, electrical and civil engineering, which Mullins says gives Tyler “the building blocks for a lot of technology.”

Other features that Tyler offers include a high quality of life for a cost-of-living that is approximately 93 percent of the national average. “Tyler is considered a garden spot. It’s very lush,” says Mullins. “A lot of people say it’s the Gateway to the South. It’s where the terrain changes, and there are trees, lakes and hills.” Every fall, thousands of people come to the Texas Rose Festival in Tyler, and every spring an equal number come to the Azalea Trail. With attractions like these, Tyler benefits employees, while also serving companies.

Lubbock Economic Development Alliance

Lubbock EDA seeks to attract and retain businesses for the city of Lubbock, Texas (above).

“Lubbock EDA’s organizational goals are to create, manage and sometimes supervise programs or activities that promote or enhance the economic development within the city. Our big vision is to become a nationally recognized location for businesses, and, in collaboration with Texas Tech University, attract merchant companies with knowledge-based job opportunities,” says Marc Farmer, Lubbock EDA’s director of business recruitment.

To achieve its goals, Lubbock EDA set into motion a five-department plan. While the business retention director focuses on helping local companies to expand in Lubbock, Farmer works in the business recruitment department to give the community new jobs by bringing in new companies. The workforce development department, by ensuring that training and education is responsive to business and industry needs, complements the work of the other departments. It also provides data to companies seeking information about things such as workforce numbers.

The Lubbock Regional bioscience initiative, which Farmer says “has really taken off,” promotes bioscience industries and fosters entrepreneurialism.  “Bioscience is a hot topic here with the research Texas Tech has done,” says Farmer.

Finally, the director of foreign trade zone markets the smart trade zones, which are located at Lubbock Preston Smith International Airport and Reese Technology Center, a former airbase.

Lubbock EDA’s programs have proved successful. In the past year, several notable manufacturing plants have expanded within Lubbock. Lubbock EDA was recently able to invest $300,000 in job creation incentives when Frito Lay, which has operated in Lubbock for more than 45 years, added 30 new jobs. Another large company, Mrs. Baird’s Bread, also received job creation incentives when it expanded and added 20 new employees. Lubbock EDA was even able to able to locate five businesses to occupy a 400,000-square-foot building that had been vacant for several years. The new businesses brought to Lubbock 600 new jobs.

Lubbock EDA has gone beyond its program, however, and has recently purchased land. Located half a mile south of Lubbock Preston Smith International Airport on IH 27, the 586 acres will provide a new draw to Lubbock. Lubbock EDA will offer land incentives to companies that meet its target industries.

The low cost of doing business, an available workforce, Texas Tech University and a pro-business community are among the reasons Farmer says Lubbock is attractive to businesses. “We’re seeing more and more companies taking a look at us and knowing that the labor pool is definitely here with Texas Tech University. We have some real interest,” he says. “Lubbock is in a central position — close to being right in the middle of the United States. Manufacturing and distribution companies can service the East and the West.”

Victoria Economic Development Council

Situated almost centrally between Houston, Austin, San Antonio and Corpus Christi, Victoria has many benefits to offer. While being within a few hours’ driving distance of these four major metropolitan cities, Victoria offers easy access to the Gulf of Mexico and has its own shallow-draft Port of Victoria. But even with amenities such as these, the Victoria Economic Development Council (VEDC) knows it needs to be aggressive in enhancing Victoria and marketing all that it has to give.

“There’s a huge commitment to business development from the local leadership,” says Dale Fowler, CEO of VEDC. “The most significant advantage for companies coming to Victoria is that we want them here and we will work to partner with them to make their business successful.”

Although the organization was originally created in 1981 by local business and government leaders, a new strategic plan was put into place several years ago, making the organization even more aggressive in seeking and retaining businesses. “What came of that plan was the understanding that, first off, there are many facets to economic development,” Fowler says. “Everyone signed on for their parts of economic development, allowing VEDC to focus solely on our primary goal of creating jobs and creating a new tax base.”

As a result of the strategic plan, VEDC built its own 320-acre business park, Lone Tree Business Center, for industrial facilities. Located between U.S. Highway 59 Business on the northwest and U.S. Highway 59 (the future Interstate 69) on the southeast, the park has all the infrastructures such as water, sewer and electricity in place and is ready for big facilities to be built. It already attracted smaller companies, which VEDC has helped to locate in surrounding areas.            

VEDC’s BEST Program (Business Expansion and Services Team) focuses on business retention. VEDC stays in close contact with businesses in the region and — through routine visits, learning about the company and understanding how the community can benefit the company — is able to grow companies and help the community.

“There could be some issues that the company needs assistance with or an opportunity within the organization for expansion. If that happens, we want to help them get the expansion here rather than somewhere else. The only way you know those things is through regular communication with those team leaders or plant managers,” Fowler says.

The BEST Program has paid off. A plastics, bag and film manufacturer, Sonoco, had the chance to put new equipment into their facility. They had gone down to working 4 days a week, and this expansion was a chance to boost their business.

“Through our regular visits, they knew who to call, and we worked with them to get community incentives,” says Fowler. “We found out later that we were not only able to keep them here but also to grow them.”

VEDC is also active in seeking new companies to come to Victoria. VEDC does everything from answering leads from the governor’s state economic development organization to marketing the city through information on its Web site. Members of VEDC also visit site-location consultants throughout the nation and court companies interested in Victoria.

After a company has chosen to locate in Victoria, VEDC stays committed to helping the company thrive. “Once there’s an interest, this organization steps them through what we call tax phase-in for the city and county taxes. We go after potential grants that may be available from the state or through the work force development centers and the local colleges for job training,” Fowler says. “We act as a liaison for those companies to put them in touch with all the available resources.”

According to Fowler, success in attracting and retaining primary companies will benefit Victoria overall. “We’re out trying to recruit manufacturers, distribution and high-end service companies,” Fowler says. “We believe that if we put money in those types of jobs, developments like retail establishments and restaurants will come.”

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