Texas #1 in Fortune 500s, Houston gains
The new 2008 Fortune 500 list is out, and Houston and Texas continue to be big winners. As I predicted last year, Texas passed up New York to be the number one state in the nation for F500 headquarters, with 58 to 55 for NY and 52 for CA. Just 3 years ago, Texas was third behind both CA and NY, with only 48, but has added an impressive 10 more since then. The future growth looks good for Texas too, with 11 companies ranked between 500 and 600 poised to move up (although most are around DFW).Houston has also been a steady gainer, from 20 in 2005 to 22 in 2007 to 25 today. We're still #2 to NYC, but they dropped from 45 to 43, so we gained a net +5 in one year - a pretty big move. Most of the Wall Street turmoil has been in the last few months, which won't show up hitting NYC until next year's list. Dallas (12), Chicago (12), and Atlanta (9 - a hard fall from 14 in 2005) are the next ones on the list, so we're well ahead at the #2 spot. Of course, that's city data, not metro. We only pick up one more to 26 in the metro count (Anadarko in The Woodlands), but Chicago and possibly the SF Bay Area would match or exceed us on a metro basis (technically, the Census considers SF and San Jose separate metros, but most people would admit that doesn't really make any more sense than splitting Dallas and Ft. Worth).
We also moved ahead of the DFW metro:
- Houston 26
- Dallas/FW 23
- San Antonio 5 (although 2 of those are mega-big Fortune 20, AT&T and Valero)
- Austin 2
- Other TX 2
Here's the AP story, focused on Texas as the new #1, with some interesting exerpts:
I hear people knock Texas and Houston for being "too cheap," but people forget how powerful that affordability - housing, cost of living, taxes, etc. - is for growth.Business experts say it's a matter of simple economics — Texas attracts companies with its low taxes, affordable land and large labor force.
"Cost is overwhelmingly the No. 1 driver," said Albert W. Niemi Jr., dean of the business school at Southern Methodist University, who wrote his doctoral thesis about companies leaving the Northeast for the Sun Belt 30 years ago.
...
Texas has been attracting big companies from out of state for nearly three decades, including American Airlines in 1979. Exxon — before it bought Mobil — and J.C. Penney Co. arrived in the following decade. All three came from New York.
In recent years, Fortune 500 companies such as Tenet Healthcare Corp. and — just last year — engineering and construction company Fluor Corp. moved in from California.
The reverse Gold Rush from California to Texas has concerned West Coast officials for years. In 2004, consultant Bain & Co. surveyed big companies for a California business group and found that half planned to shift jobs out of state or at least stop expanding in California because of high costs, including taxes. Of that group, 27 percent said they would go to Texas, more than any other state.
Lyssa Jenkens, chief economist for the Greater Dallas Chamber of Commerce, said there is a snowball effect — once a few big companies move in, others follow.
"If you move to Dallas-Fort Worth or Houston, you're in the company of other large companies," she said. "They like to be near each other because there are all kinds of services for corporate headquarters — law, accounting, engineering, (information technology) services."
Thanks to Brian for the heads up and stats.
Labels: affordability, economy, headquarters, rankings
posted by Tory Gattis @ 5:28 PM
13 Comments:
I tried to compile the top MSA Corporate locations, and here they are:
New York 51+ (does not include NJ or CT)
Chicago 29
San Francisco/San Jose 29
Houston 26
Dallas 23
Los Angeles 20
Minneapolis 18
Philadelphia 16
Detroit 16
Washington DC 15
Interestingly, I think there is a strong correlation between the size of the city's downtown and the number of fortune 500 companies. That's just from memory though.
I don't fault the "cheapness" of Houston per say. I fault the mentality that decisions should be made solely on cost. There are quality of life issues that are worth the extra "cost."
On a related note, I think as the shift of headquarters continues to places like Texas and Houston, you are going to see increasing pressure for the implementation of policies to address quality of life issues and thus eventually start to effect cost.
What percentage of our companies are oil related?
Hard to say. Depends on how you want to count them. List here:
http://money.cnn.com/magazines/fortune/fortune500/2008/states/TX.html
Regardless of the F500 numbers, I've heard that the overall Houston economy is less than half energy, although with the growth the last few years, that may have changed. Surprisingly, I once saw a list saying we're less concentrated in energy than NYC is in finance.
Brian,
Lower New York is home to 32 Fortune 1000 corporations in New Jersey (21 F500) and 14 (7 F500) in Connecticut.
52 Fortune 500 are in Greater New York City including Long Island and Lower New York State, so that totals a whopping 80 overall, although it bears noting that not only is greater New York's job growth just about as miserly as the growth in its built environment, but also that about ten of these corp. HQs take an hour to get to from Manhattan and so they aren't really any more or less dependent upon its amenities than is Princeton, which is *not* part of Greater New York.
Anon,
Ya, I had compiled all these cities and then it dawned on me that I had left out the NJ and CT part of NYC area, and was too tired to go back and finish.
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I've seen some discussion from time to time about corporate moves to Houston. And, because I'm a numbers nerd I compiled a list of the F500 companies involved in oil/gas that are not located in Houston. I also ranked them by what I think is their probability of moving to Houston by 6 categories.
1)Current Location Expensive
2)State moving incentives available
3)Politically hostile location
4)Big Footprint in Houston already
5)Comparable Climate and scenery
6)Likely has recruiting problems
Some of these are just my impressions, not always based on hard facts. Like for #6, I figure that Murphy Oil probably doesn't attract the best talent there to Little Rock.
Anyway, here's the list and my rankings.
Chevron San Ramon,CA B
Hess New York B
Occidental Los Angeles B
Sunoco Philadelphia B
Peabody En St. Louis B
ExxonMobil Dallas C
Murphy Oil Arkansas C
Devon Ener Okla. City C
Chesapeake Okla. City C
Valero San Antonio D
Tosoro San Antonio D
Western Re El Paso D
Holly Dallas D
XTO Energy Forth Worth D
EnTrEquity Dallas D
Most of those are very embedded in the local public philanthropy and upper-class social circles of their HQ regions, so the political climate may be less relevant than the microclimate around the execs. However, it does raise the point that ExxonMobil moved to Irving at a time when DFW was by far the most globally connected airport in Texas, and now the difference is, if not negligible, much less. I wonder if this sort of thing is the reason that Tory pays so much attention to int'l service - if the idea is that just as a mall won't locate where there isn't a highway interchange, major transnational operations won't locate where there isn't cost-effective access to and from most of the far-flung trading nodes. I had figured that corporate jet leasing would be within the price range of most of the lucrative businesses in question, but maybe intercontinental flight patterns are looked at differently than US-Mex-Canada ones.
Actually, IAH now has more total nonstop destinations, and particularly international nonstops, than DFW. DFW/AA has slightly more domestic destinations, slightly more daily flights (~800 vs. ~730), and bigger planes (CO does a lot of RJs). Of course a move is disruptive. I can only see them doing it if they just get sick of flying back and forth between Houston and Dallas for meetings.
https://www.pwcmoneytree.com/MTPublic/ns/nav.jsp?page=region
http://online.wsj.com/article/SB10001424052748703915204575104222702359984.html?mod=WSJ_Small+Business_LEADNewsCollection
Texas and Houston still lack high potential startups. Silicon Valley, Southern California and the Boston-NY-DC corridor continue to dominate patents, new venture formation and funding$$ for computing, biotech, medical devices and EVEN alternative/clean energy.
It is from startups in these sectors that future mega-corporations will arise (and create more startups).
Also, all mega-corps are not equal--a single Google, Intel or Cisco is far more valuable to a "startup ecosystem" than a Chevron, Exxon or TimeWarner.
https://www.pwcmoneytree.com/MTPublic/ns/nav.jsp?page=region
http://graphicsweb.wsj.com/documents/NEXT_BIG_THING/NEXT_BIG_THING.html
Texas and Houston still lack a high powered venture-backed business eco-system. The West Coast and Boston-DC Corridor regions continue to completely dominate patent generation and new high tech venture formation and financing$$ for “future industries” such as clean/alternative energy, biotech, medical devices, software, internet, microelectronics and semiconductors. From these new technologies and ventures will come the new mega-corporations and business elite (billionaires).
Already in Silicon Valley a “mafia” of cashed-up Google alumni are creating or funding a whole new generation of high potential ventures in these sectors.
At present I do not see large business eco-systems with many high potential block-buster companies in Houston, Dallas or Austin.
Also, companies such as Intel, Microsoft, Google, Cisco or IBM are far more valuable to a startup ecosystem than old-guard firms such as Exxon, Chevron, TimeWarner or GM.
2 of the top 10 are in Austin, which is not bad for Texas. That said, you're absolutely correct we need to do better at nurturing high-potential startups. But a couple things to consider. One is that energy startups are likely to get acquired by the big energy companies, which means most or all of their operations may get moved here. Additionally, as the successful startups grow, they tend to find CA and the east coast very expensive places to grow, so they start shifting large groups of employees and/or factories to lower cost and more business friendly states like Texas. We don't want to lose that advantage.
But I still agree we need to do more to nurture them here first.
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