The topic was “The Ascension of DFW”.
Just about anyone employed in the Information Technology, Engineering or Scientific fields will agree that Texas was the place to be during the recent economic turmoil, with DFW clearly the metropolitan area to live in Texas.
So what has contributed to DFW’s success and what can we do to sustain it? The entire report can be found at “The Ascension of DFW”, published by SMU Cox School of Business. Here are the highlights of some of the most important points,
First, Texas is a state that maintains one of the world’s freest economies as measured by The Fraser Institute. Texas ranks second only to Delaware, but with far greater economic output. The two most important measurements of free economies are low tax rates and the avoidance of unionized employment.
When companies relocate (whether headquarters or otherwise) or expand existing operations, management reviews both short and long-term benefits in terms of location. Texas is one of only 7 states with no state income tax, and only one of 5 states with no corporate income tax. Texas does levy a general business tax, but it is relatively mild at less than one percent. Over the past 15 years DFW employment grew from 2.3 million to 2.9 million, second highest growth in the nation. Also, DFW has more large corporate headquarters (58) than any other U.S. metropolitan area, including 24 in the Fortune 500.
The Texas labor market is also relatively free of impediments that discourage job creation according to the report. Partly due to the right-to-work laws, which prohibit forcing workers to join unions, Texas has only 6.2 percent of union membership in private sector jobs. Compare that to 27.5 percent in New York, and 17.8 percent in California.
The report further states that the high degree of economic freedom gives homegrown businesses room to grow. It acts like a magnet for relocation for both companies and job seekers coming from other states. Like proof? Between 2004 – 2008 California surrendered more workers to Texas (tens of thousands) than any other state. Texas on the other hand had a net migration FROM Texas to all states of less than 400 in the same time frame. And finally, Chief Executive magazine named Texas the best state for job growth and business in 2009, and California the worst.
Second, DFW has embraced globalization, DFW based companies are benefiting and profiting significantly from an increased global client base. While competitive globalization can bring traumatic workforce changes in early stages, successfully navigating those challenges can bring significant returns. Based on the world’s population, 21 of 22 prospective customers reside outside the United States. Here are just a few successful examples of DFW companies leveraging the global client base:
| Company | Year | % International Rev. | Year | % International Rev. |
| T.I. | 1998 | 67.7% | 2008 | 87.6% |
| ENSCO | 1998 | 45.3% | 2008 | 79.2% |
| Blockbuster | 1998 | 20.6% | 2008 | 32.1% |
| Flowserve | 1998 | 41.9% | 2008 | 65.4% |
| GameStop | 2004 | 0% | 2008 | 26.6% |
Mary Kay is privately held and does not release public revenue. They do however sell cosmetics in 35 countries, a clear example of embracing global customer opportunities.
In 2009 SMU’s Caruth Institute for Entrepreneurship identified DFW’s fastest growing emerging companies. More than half the Dallas 100 Class already has ties to foreign markets.
Third, DFW brings together businesses and workers well suited for success in the up and-coming services economy, both at home and overseas. A well-educated and trained work force is the foundation to keep a good thing going. At the end of 2009, service producing industries accounted for 83.2 percent of DFW’s private sector employment, up from 76.8 percent at the beginning of 1999.
According to Dr. Cox, the 21st century’s engine of growth will be globalization. America’s edge lies in specialized services; job creation for a well educated workforce. DFW must continue to attract the quality and sufficient quantity of educated workers to continue to propel our local economy. Dr. David Daniel, President of The University of Texas at Dallas (UTD) echo’s this position. Pursuit of Tier One University Research status by Texas based universities is key to supporting this effort.
As an IT staffing company, the InSource Group has our own anecdotal evidence. In business since late 1992, our client base has changed significantly. Several top revenue producing clients in 2001 no longer do so. Some are still in business, but a number who did not successfully manage the shift in global competitiveness are no longer in business. We have also witnessed (and benefited) from many of our client’s rapid growth due to increased global sales. Their success also brings the challenge of securing talent to accommodate a shifting skill set, both at the individual contributor as well as management level to continue their growth.
Dr. Cox concludes with the projection that DFW can look forward to many generations of continued success, but only if we accurately track the global competitive changes, and enact state and federal policies that support maintaining a global leadership position.
Wayne Rampey
Vice President
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