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Amir MirabiManager - International BusinessOffice of the Governor - State of Texas
Port Arthur Small Business SummitPort Arthur, Texas28 Oct 2009
Texas – Leader in the Global Economy
The Global Economy – Turmoil ?
The Bad & Ugly
Global economy has taken a severe hit - worst since WWII World trade down 10 percent US exports down 18 percent Texas exports down 17 percent
“Economic Flu” has hit all sectors & all nations in varying strains
Demand contraction has dealt a harsh blow Unemployment plagues many Credit is tight - limits spending
Lessons Contagion validates integrated economies Globalization is here to stay & more critical than ever
Sources: WorldBank / Texas State Comptroller of Public Accounts / Federal Reserve Bank (Dallas)
The Global Economy – or Turnaround ?
Sources: Kauffmann Foundation / Federal Reserve Bank (Dallas) / Moody’s Economy
The Good
Massive/unorthodox US & foreign monetary stimulus has spurred growth Financial markets have stabilized Wage and price inflation are subdued Timing & speed of recovery is varying
Asia leading recovery US in first stages of recovery Europe lagging
Some nations & states more resilient than others Texas has a strong economic umbrella Driven largely by exports
Among US states, Texas has been at the forefront of globalization
Ranked #2 most globalized state Houston & Dallas top 10 most international cities Beaumont & Austin top 25
Issue Old NewMarkets Stable DynamicScope of
CompetitionNational Global
Organizational Form
Hierarchal Networked
Production System Mass Production Flexible ProductionKey Factor of Production
Capital/Labor Innovation/Ideas
Key Technology Driver
Mechanization Digitization
Competitive Advantage
Economies of scale Innovation/Quality
Relations Between Firms
Go it alone Collaborative
Skills Job-Specific Broad and ChangingWorkforce Organization Man “Intrapreneur”Nature of
EmploymentSecure Risky
Source: Atkinson, Robert D. and Daniel K. Correa. “The 2007 State New Economy Index: Benchmarking Economic Transformation in the States.” Kauffman Foundation and The Information Technology &Innovation Foundation
The Global Economy – A Paradigm Shift
Texas Ports Facts
Realities Texas port activity has grown 2x as fast as US in last 10 years 317 million metric tons of cargo annually 17% of total US tonnage 50% of all US foreign imports & exports
Benefits Nearly 1 million jobs in Texas $30+ billion in personal income for Texans Business sales of $178 billion Texas marine & intermodal transport account for $65 billion
Sources: Texas Ports Association / Federal Reserve Bank (Dallas)
Texas Ports – Creating Statewide Strength
A Key Economic Component
Texas is the largest exporting state in US - 7th year in a row - $192 billion Compared to US, Texas exports larger share of its output: 15% TX vs. 8% US Compared to US, Texas jobs are more export-reliant and related:
Overall - 6.7% TX vs. 5.1% US Manufacturing jobs - 23% TX vs. 20% US Computer & Electronics jobs – 48% TX vs. 35% US
Diverse & Dynamic
Chemicals – S38.3 billion Computers & Electronics – $35.2 billion Machinery Manufactures - $27.3 billion Petrochemicals & Coal-related products – $25.3 billion
Source: Federal Reserve Bank (Dallas)
Texas Exports – Making Texas Strong
Source: Federal Reserve Bank (Dallas)
Texas Exports – Output Levels
Source: Federal Reserve Bank (Dallas)
Texas Exports - Composition
Source: Federal Reserve Bank (Dallas)
Texas Exports - Destination
Texas: The Business Capital
Texas has most Fortune 500 & 1000 HQ’s of any state - 64 & 113 companies Texas ranked #1 for Corporate Site Selectors by Site Selector Magazine - 2008 Texas ranked as “Number One Place for Business” by CNBC – 2008 Texas home to most 2008 Hispanic Business 100 of any state – 23 companies Texas won Forbes Magazine “Best Cities for Jobs” - Houston, Austin, Ft. Worth Texas won Fortune Magazine’s Nation’s 2008 100 Fastest-Growing Firms list
25 companies in Texas vs. 18 in California
Texas chosen by Chief Executive Magazine as “Best Place for Business” –
4th year in a row (2005-2008)
Texas picked as 2007 “State of the Year” by Business Facilities Magazine
Texas home to 3 Major US Airlines – Continental, American and Southwest Texas produced 1.29 million jobs in the last 5 years – #1 in US
Source: Texas State Comptroller of Public Accounts
“Texas has established a worldwide reputation for its open, positive attitude toward the business community. With a low tax burden, low living costs and government programs designed to help rather than hinder business, Texas is
the perfect location for international companies.” – Gov. Perry
Texas: The Investment Capital
Texas leads US in total FDI with ~$85+ billion invested in last 5 years (2003-2008) 2007 FDI into Texas was $11.8 billion creating nearly 5,500+ new jobs Texas leads US in EU Commercial Property Investments ~$51 billion Texas ranked 49th among states in its per capita state tax burden
No State Income Tax / No Corporate Tax
Texas had 3rd lowest cost of living among states in 2008 Texas Ports handle nearly 51% of all US foreign imports & exports Texas has largest US rail system (23,337 km) and largest road system (671,594 km)
More than 2x the size of California with 11,774 km in rail / 374,638 km in roads
Texas has most Ports of Entry than any other state – 28 total Florida & N. Dakota tied for #2 with 22; California #3 with 21
Source: Texas State Comptroller of Public Accounts
Texas top 3 in nation for total business & academic R&D - $15.86 billion
Texas top 3 in nation for science Ph.D.’s awarded – 1,930 doctorates
Between 2000-2008, Texas’ population grew more than 2x the US rate 14.6 percent (Texas) versus 7.2 percent (US)
Texas has 5th-youngest workforce in the US, with a median age of 39.4 years
45,000+ college-graduate workers moved from other states to Texas in 2007-8
Texas has 2x the US average of fully bilingual professionals in the workforce
Texas: The Human Capital
Source: Texas State Comptroller of Public Accounts
Texas ranks 2nd for semiconductor manufacturing
Texas firms attracted $1.4 billion in venture capital for 2007 Nearly half - $684.3 million – allocated to Austin-based firms
Texas ranked 3rd for number of investments into venture-backed companies
Texas ranked 2nd for number of patents issued – 6,016 awarded
Texas has 900+ biotech and biomed firms representing nearly 29,000 workers
The world’s largest Medical Center is in Houston 46 hospitals and universities – 12,000+ doctors - 75,000+ employees
Texas: The Innovation Capital
Source: Texas State Comptroller of Public Accounts
“Texas is blessed with an abundance of technical, legal, financial and research expertise that can be deployed to meet the challenges of
providing energy for a growing population and economy.”
Energy industry accounts for ~17% of the Gross State Product
Texas is the nation’s largest producer of energy Accounts for 21.3% of total oil and 27.8% of total US gas production
Texas has ~24% of all US oil reserves and ~32% of all US gas reserves
Texas’ 23 refineries account for ~26% of all US refining capacity
Texas leads US in all renewable energies with largest wind generation capacity
Currently producing 27% of the national total renewable energy capacity Enough renewable energy to power over 1.5 million Texas homes
Texas: The Energy Capital
Source: Texas State Comptroller of Public Accounts
Texas leads US with largest solar, wind and renewable energy capacity Produces almost 2x the amount of California as a whole #1 in Wind - producing nearly 3x as much wind energy as #2 Iowa and #3 California
Texas leads US with biomass, landfill and plant-derived fuel production 75+ trillion BTU of biomass energy
Texas is the nation’s largest producer of “biodiesel”
187 million gallon capacity per annum / 73 million produced in 2007
Recent Renewable Energy Generation Statistics (Megawatt Hours)
Wind 7,907,000 MWh Wood & Derived Fuels 900,888 MWh Hydropower 661,971 MWh Landfill Mass 218,813 MWh Biomass 43,516 MWh
Texas: The Renewables Capital
Source: Texas State Comptroller of Public Accounts
“Texas is a hub for world trade, linking North, South, East and West – an ideal location for international commerce”
2008 Texas GSP is $1.245 Trillion - Up 4.2% from 2007 vs. 1.9% for US Represents 12th largest economy in the world
Texas is the leading exporter in the USA - 7th year in a row
Texas exports swelled from $168.2 billion in FY07 to $192.14 billion in FY08
California a distant second with $144.8 billion
Chemicals were Texas’ most important export - $38 billion Computers and Electronics 2nd most important export - $35 billion
Foreign-owned firms directly employ 368,200 Texans EU countries directly employ 198,000 Texans
Texas: The Trade Capital
Source: Texas State Comptroller of Public Accounts / US Department of Commerce
Bi-Lateral trade between Texas and the World ~ $522 billion
Export trade with the following countries:
2007 2008
Mexico $56.0 billion $62.1 billion Canada $16.9 billion $19.2 billion China $8.27 billion $8.45 billion South Korea $5.56 billion $5.16 billion Netherlands $5.29 billion $7.06 billion Taiwan $5.08 billion $3.88 billion Singapore $4.52 billion $5.46 billion Brazil $3.90 billion $5.96 billion Japan $3.44 billion $3.63 billion U.K. $3.27 billion $3.54 billion
Texas: Trade with the World
Source: US Department of Commerce
“Bi-Lateral trade is an essential part of our national and local economies”
Did you know:
International trade generates nearly 30% of US GDP
95% of retail and commercial consumers live outside of the US
97% of US exporters are SMEs, and exports directly support over 12 million jobs in the US and support millions more indirectly
Imports keep inflation low and expand consumer choice and quality
Foreign companies in the US directly employ 5.1 million Americans and support millions more indirectly
Benefits of International Trade
Source: US Chamber of Commerce
Trade Means Jobs
Global demand for $192+ billion in Texas-produced goods directly generates nearly 500,000 jobs
Export-supported employment related to manufactured goods accounts for nearly 1 of every 18 private sector jobs in Texas
Over 30,000 businesses in Texas sell their products overseas - and they all employ Texans !
92% of Texas businesses that export are SME’s
There are over 350,000 Texans employed by foreign companies
EU-Affiliated firms alone employ nearly 200,000 Texans
What International Trade Means to Texas
Source: Texas State Comptroller of Public Accounts / US Department of Commerce
Trade Means Revenue
Sales revenue generates jobs and supplements the state tax base, which funds community assets like roads and schools
$128.8 billion in Texas manufactured goods - representing ~15% of the total state economy - are exports
FDI into Texas in 2007 was $11.8 billion directly creating nearly 5,000+ new jobs
Total FDI into Texas over the past five years ~$85+ billion
Texas leads US in EU Commercial Prop. Investments ~$51 billion
What International Trade Means to Texas
Source: Texas State Comptroller of Public Accounts / US Department of Commerce
“As a hub for world trade, Texas links North and South, East and West serving as an ideal location for international commerce and a major
center for foreign investment”
From 2001-2007, Texas exports to Latin America rose by 49.2 percent to $73.2 billion in 2007
Texas imported $245.2 billion in products from other nations in 2006
Mexico accounted for more than half of that amount, at $124.0 billion
U.S. affiliates of Latin American companies employed 50,000+ Texans, including 15,000 Texas manufacturing jobs
LatAm accounted for 9 percent of total Texas FDI or ~$7.5 billion
$346 million in commercial properties
Texas: Gateway to Latin America
Source: Texas State Comptroller of Public Accounts / US Department of Commerce
“As a hub for world trade, Texas links North and South, East and West serving as an ideal location for international commerce and a
major center for foreign investment.”
From 2001-2007, Texas exports to China rose by 424.3 percent to $8.3 billion in 2007
Texas imported $245.2 billion in products from other nations in 2006
China ranked second as importer with $15.9 billion in imports
U.S. affiliates of Asia-Pac companies employed 42.000+ Texans
Asia-Pac accounted for 14 percent of total Texas FDI or ~$11.8 billion
$1.9 billion in commercial properties
Texas: Gateway to Asia
Source: Texas State Comptroller of Public Accounts / US Department of Commerce
Common Misconceptions
Company has to be large
Company must have an in-house legal , marketing & export dept’s
Company must have substantial trade volume
Company officials must be fluent in foreign languages
What are the Common Exporter Mistakes?
Making the Export Decision
Obtain qualified export counseling and develop a master international strategy and marketing plan
Sufficient commitment by top management Concentrate on one or two geographical areas and
establishing a basis for profitable operations and orderly growth
Sufficient care in selecting overseas sales and public relations representatives and distributors
Do Not Assume that a given market technique and product will be successful in all countries
Must be willing to modify products to meet regulations or cultural preferences of other countries
Consider the possibility of appointing an export and marketing management company
The ‘How’ of Exporting
Best Practices of Successful Exporters
Select Attractive Markets
Leverage US Customer Relationships
Select Partners (Distributors, Reps, Agents, etc.)
Understand Culture and Invest in Personal Relationships
Protect Intellectual Property
Reduce Payment Risk
How Texas Companies Achieve Success
The Governor’s Office of Economic Development & Tourism functions as the lead state agency for economic development working in partnership with businesses and local communities to promote economic prosperity and job growth for Texas
Our customers are the citizens of Texas, economic development and tourism organizations, businesses, communities, gov’t entities and elected officials
Financial incentive packages are custom-designed to meet the needs of both the company and community
CEOs and top-level executives work with Governor’s Office to negotiate future business expansion and relocation prospects
Texas Governor’s Office - EDT
The Office of International Business provides the following:
Trade Shows, Events and Missions
Export Counseling & Advocacy
Collection and Dissemination of Trade Leads
Trade-Related Market Research and Analysis
State of Texas - Mexico Office
How the Governor’s Office Assists
US Commercial Service
Mission is to promote the export of goods & services from the US to foreign markets
158 Offices worldwide / 108 Export Assistance Centers in US – 7 in Texas
Assistance with:
Market Research & AdvocacyExport Licensing & DocumentationProduct Standards & ComplianceTariffs, Taxes & Rate Schedules
Who Texas Partners With
Other Partners
DECs (District Export Councils) – 4 in Texas
USDA Foreign Agricultural Service
EXIM (Export-Import) Bank
OPIC (Overseas Private Investment Corporation)
SBDC Network (Small Business Development Centers)
ITC (International Trade Centers)
Local Chambers of Commerce / City Offices
Congressional Offices / Consulates
Who Texas Partners With
EXIM Bank http://www.exim.gov
Small Business Administration http://www.sba.gov
US Customs http://www.customs.ustreas.gov
US Dept. of State http://www.state.gov
Overseas Private Investment Corporation http://www.opic.gov
Helpful Websites
United States Department of Commerce http://www.us-doc.gov
US Commercial Service http://www.buyusa.gov
District Export Councils http://www.exporttexas.com
Office of the Governor http://www.texasone.us
Helpful Websites
• Texas Enterprise Fund• Emerging Technology Fund• Texas Enterprise Zone Program• Texas Capital Fund Infrastructure Program• Texas Capital Fund Real Estate Development Program• Rural Municipal Finance Program• State Sales and Use Tax Exemptions• Texas Industry Development Program• Texas Leverage Fund• Texas Economic Development Act• Ad Valorem/Property Tax Exemption• Economic Development Refund• Renewable Energy Incentives• Moving Image Industry Incentive Program
State Incentives & Programs
$377+ million in funds appropriated
Deal closing fund Jobs driven - Wages should exceed county average salary Repayment formula based on sales tax generated from wage expenditures Substantial job creation and high wages (usually 100+ jobs) Significant capital investment Financial participation from the city, county and/or school district; in the
form of incentives & abatements Secure financing in place Used when there’s competition with another state Requires unanimous approval of the Governor, Lt. Governor and Speaker
TEF has generated 53,950 new jobs and $14+ billion in capital investments
MARTIFER (Portugal) awarded ~$1 million (Sep 2008) $40 million Wind Tower Plant investment / 225 jobs in San Angelo, TX
Texas Enterprise Fund (TEF)
Expedites development and commercialization of new technologies
Created in 2005 and re-appropriated in 2007
Commercialization Grants:
Provides elected early-stage investment in new, technology-based, companies that collaborate with public or private institutions of higher education in Texas
Matching Research Superiority Grants:
For acquisition of top talent for companies collaborating with Texas higher education institutions
Grants:
Assists companies in leveraging State funds to match Federal grants
ETF has allotted $140 million to 90+ projects
Emerging Technology Fund (ETF)
Texas unemployment rate consistently lower than the US rate 33 months of lower unemployment than US - currently 8.2% TX vs.
9.8% US
According to 2008 FDIC Report, Texas banks are the healthiest in nation
Texas foreclosures one of lowest in the US with 1 in every 838 homes
Comparable foreclosure rates in other states include:
Nevada - 1 in 62 homes Florida - 1 in 140 homes California - 1 in 144 homes
Texas: Positive Economic Outlook
Source: Texas State Comptroller of Public Accounts / US Department of Commerce
In FY08, Texas gained 93,500 jobs – #1 in US This represents over 59% of all job gains in US More than all 49 other states combined Houston 22,500 jobs - Austin 9,900 jobs - San Antonio 4,800 jobs
Texas: Positive Economic Outlook
State Job Growth – Top 10 StatesState Net JobsTexas 93,500
Oklahoma 19,600
Louisiana 12,400
Wyoming 9,000
Washington, DC 6,400
North Dakota 6,200
Alabama 4,800
Kansas 3,300
Source: Texas State Comptroller of Public Accounts / US Department of Commerce
As stated by The Economist magazine:
“ The future is Texas. If you want to see where America should be heading, start by studying Texas. ”
____________
As recently stated by Governor Rick Perry:
“ By reaching across borders, Texas’ entrepreneurs have made the Lone Star State a lynchpin of international trade, creating new opportunities for Texans and their worldwide
partners alike.”
What It All Means
Amir Mirabi Manager - International BusinessOffice of the Governor - State of Texas221 East 11th Street, 4th FloorAustin, TX 78702
Tel 512.936.0213Fax [email protected]
Contact Information