Austin, TX — As the Texas State Chamber, the Texas Association of Business (TAB) today released a new economic impact study demonstrating the critical importance of incentives in attracting new manufacturing projects and expansions in Texas.
The study, undertaken by economic analysis firm TXP, found that Texas incentives for manufacturing projects alone generated $13.3 billion in economic activity in 2021, supporting more than 52,000 jobs in Texas with total annual earnings of $3 billion. The results of the study underscore why passing the Texas Jobs and Security Act (HB 5) – which would permit tax incentives for attracting major manufacturing and critical infrastructure projects – is crucial to ensuring Texas’ continued economic growth and record-breaking job creation. The release of the study comes at a critical time, when construction spending related to manufacturing reached its highest annual total on record in 2022 - $108 billion.
“The positive economic impact of these incentives is undeniable, and underscores the need to pass HB 5,” said TAB CEO Glenn Hamer. “The Texas Jobs and Security Act gives communities the competitive edge they need to attract major manufacturing projects that create jobs and generate long-term revenue for public services. We urge the Texas Legislature to pass HB 5 to ensure the Lone Star State can maintain its explosive economic growth, promote technological and manufacturing independence from foreign nations and reshore supply chains.”
The new study highlights the important example of Tesla, Inc.’s recent manufacturing project, which was secured through state incentives in 2020. To receive the maximum incentive from Travis County, Tesla committed to invest at least $2 billion and create 5,000 jobs. According to a recent report documenting 2022 activity, Tesla has investment $5.8 billion and created 12,227 jobs.
“This is how it’s supposed to work: an incentive deal is struck that lays out acceptable levels of performance, and the company goes well beyond what is required, to the benefit of everyone,” TXP President Jon Hockenyos writes in the study. “Texas is well-positioned for long-term economic development success, as the fundamentals are in place. Current incentive policy undermines our competitive position; if HB5 can be implemented, we’ll be well-positioned to win going forward.”
The actual economic impact to local governments is likely even larger than the study suggests, as TXP notes that the tax benefits to local governments associated with increased community income, such as increased local sales tax and property taxes, are not captured in the report. Incentives that secure new projects create ripple effects move through the local economies, which in turn create increased revenues for local jurisdictions.
To read the full report, The Economic Impact of Chapter 313 Manufacturing Projects in Texas, click here.
TAB is the Texas State Chamber, representing companies of every size and industry. The Association’s purpose is to champion the best business climate in the world, unleashing the power of free enterprise to enhance lives for generations. Follow TAB on Facebook, Twitter, and LinkedIn.
##