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Peeling Away the Layers

     Of all the projects that have come their way of late, Texas officials appear proudest of Toyota's choice last year of San Antonio for a mammoth new man ufacturing facility. The $800-million assembly plant will bring the state 2,000 jobs, with additional opportunities rippling out of a supplier park also being developed there. Building the 2-million-sq.-ft. (185,800-sq.-m) plant will alone generate 2,100 construction jobs. The facility, which will sit on 2,000 acres (809.4 hectares) about 10 miles (16.1 km) south of downtown San Antonio, is expected to churn out 150,000 Toyota Tundra trucks annually upon its opening in 2006.
      "We started our search with sites in 20 states," explains Dennis Cuneo, senior vice president of Toyota Motor, NA, who led the search for "Project Starlight." Along with San Antonio, Cuneo's short list included locations in Mississippi, Arkansas and Tennessee. Cuneo says the company's choice of Texas was due in large part to the absence of other automakers there.
Texas Gov. Rick Perry addresses the crowd at the Toyota announcement, backed by Toyota's Dennis Cuneo (left) and San
Antonio Mayor Ed Garza.
Photo courtesy of Office of the
Governor of Texas.
      "The fact that you don't equate San Antonio with auto manufacturing was not something we viewed as a negative," he says. "We like to build our plants where they're not near other assembly plants." The isolation strategy explains the company's interest in an on-site supplier park. Another unique feature Texas offered: it is in the center of a vast consumer market for pick-up trucks that includes the U.S. Sun Belt and Mexico. "[The plant] will have a positive marketing presence," Cuneo says.
      Cash was not a pivotal consideration in the deal. "Their incentive package was good, but it wasn't the best," says Cuneo. More impressive was the re-write of Texas tort laws, along with the personal attention the company received from the highest levels of state and local government. Cuneo also met with Gov. Perry early on in the process. "The governor was determined to do what he could to get this project in Texas."
      After securing the Toyota project, Perry did something rarer still. He asked Cuneo for advice on how Texas could enhance its mega-project appeal. "I told him one of the state's disadvantages was that top economic development officials didn't report to him," Cuneo recalls. Perry soon moved the state's marketing and project management apparatus into the Office of the Governor. "Governors are always involved in projects like these, but you want to make sure you don't have to go through three layers of bureaucracy to get to them," Cuneo says. "It does make a big difference."
      Perry says the very nature of site selection makes the new organizational model ideal. "These are business deals," he says. He wants top company executives to view him as a peer -- the state's CEO. "When Vought Aircraft was making their decision, Tom Risley [Vought CEO] was talking directly to me."
      With organizational reforms, the Enterprise Fund and a business-friendly tort structure now putting the wind at their backs, Texas officials have begun eyeing potential changes in the state's tax code. Despite having no personal income tax, the burden on Texas businesses is heavier than in competing states, according to Ray Perryman, whose firm has conducted several large-scale studies of the state's business environment. "On balance, I don't believe our tax structure represents that great of an advantage for us," he says. "Businesses pay about 60 percent of the total -- state and local -- taxes in Texas."
      Gov. Perry and many legislators would like to spread the burden out more evenly between business and non-business taxpayers. But talk thus far has centered on re-structuring the state's public school financing regime, now based primarily on residential property taxes. Perry's concern is that such a re-ordering might give lawmakers an opening to make the tax code even more lopsided.
      "I've been very adamant with the legislature on taxation," says Perry, who vetoed a record 82 bills in his first two years. "We don't want to create a new tax structure that puts job creation at a disadvantage -- even in the name of education." Site Selection
Lawrence Bivins is a freelance writer based in Raleigh,N.C.

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