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Change Will
Do You Good
One of many high-profile headquarters to hit Texas in recent years, Pier 1 Imports will soon occupy its new complex in the Dallas-Ft. Worth metroplex.

     During the heady 1990s, Texas had grown accustomed to surfing the wave of prosperity that washed over most of America. By 2001, with technology in recession and air travel reeling (the state is home to three major airlines), Texans' economic fortunes were feeling a chill. Some leaders believed the state's natural assets were enough to guarantee continued prosperity. The state's fabled livability and eschewal of a personal income tax alone ensured continued inflows of young people. As competing states moved ahead with aggressive economic development agendas, Texas marched in place -- until recently.
      "One of the most important things we've done to make Texas more competitive is reform our tort system," Perry says. In 2003, at the prodding of Perry and the state's business community, legislators passed sweeping changes in the state's tort laws, ranked by the U.S. Chamber of Commerce as among the nation's most hostile toward business. The legislative reforms included restrictions on "venue shopping," inducements for out-of-court settlements and caps on non-economic damage awards. Later that year, despite a $12-million advertising barrage from trial lawyers, Texas voters codified the reforms into the state's constitution. A more business-friendly tort structure catapults Texas in front of neighboring states, believes Perry. "It will pay huge dividends," he says, citing economists' estimates that legal reforms could bring 240,000 jobs and $36 billion into the Texas economy.
      The state has also established a discretionary incentive program. "Until recently, Texas lagged in incentives," explains Ray Perryman, a former economics professor who now heads up The Perryman Group, a Waco consulting firm. "For years, no one thought they were really needed," he says. Instead, the state left incentives up to communities through passage of a local option sales tax. "Today, things are so much more complex, and the state realized it had to get involved," says Perryman.
      The result was the 2003 creation of the Texas Enterprise Fund, a pool of cash that can be applied to projects at the discretion of the governor, lieutenant governor and speaker of the Texas House of Representatives. "The Enterprise Fund is important when it comes to closing the deal," Gov. Perry says. Funded at $295 million, the fund had by mid-2004 allocated nearly $136 million toward seven projects. At the same time, the state also consolidated a hodge-podge of entrepreneurial finance and community assistance programs under a single entity known as the Texas Economic Development Bank.
      Tort reform measures make the state especially attractive to manufacturers, Perryman suggests. Economic pressures have kept manufacturing job growth at anemic levels even as indicators like production and factory orders point to an upturn for Texas manufacturers, Perryman says. New positions should follow, assuming a mid-July 2004 announcement by Florestone Products Company is any indication. The company will spend $6 million building a 120,000-sq.-ft. (11,148-sq.-m) facility in Denison, where the Oakland, Calif.-based firm will place 70 manufacturing and executive positions. It will be the family-owned company's first presence outside of California, where it has made fiberglass bathtubs, shower stalls and utility sinks since its founding in the late 1940s. The city, an hour north of Dallas, is giving Flore stone a 10-acre (4.05 hectares) parcel at Foundation Business Park. Florestone, which had considered sites in Arkansas and Oklahoma, hopes its new site will be fully operational by June 2005.
      A similar renaissance appears to be underway for Texas' electronics industry. In March 2004, Texas officials joined leaders of International Sematech, a semiconductor manufacturing research consortium operating in Austin since 1988, in launching the Advanced Materials Research Center (AMRC) in partnership with several public and private universities in Texas.
      The Center will pioneer next-generation semiconductors, while supporting the state's efforts to carve a niche at the intersection of nanotechnology and life sciences. The Texas Enterprise Fund is putting up $40 million of the $160 million needed to start AMRC, which should generate 4,000 technology jobs over the coming decade.
      And rising out of a four-year slump in the chip sector, Advanced Micro Devices and Photronics are following Texas Instruments' lead and planning major equipment upgrades to their own production sites in Austin.

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