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2008-05-11 BACK
The Importance of the Industrial Sector in Texarkana
The Importance of the Industrial Sector in Texarkana This article originally appeared in the Texarkana Gazette on May 11, 2008 Business Matters Dr. Ed Bashaw, Dean, Texas A&M-Texarkana College of Business Last month we launched and introduced the Texarkana Industrial Index (TII) to the Texarkana business community. I write this month to explain the value of the industrial sector to the Texarkana market and to give some examples in Texarkana that illustrate this sector’s local significance. I know that the goal of our local economic development folks is to enhance our local environment such that it enables expansion in existing firms and the market entrance into Texarkana of new firms. They do so for good reason. For example, based on 2006 data provided by the Bureau of Labor Statistics, the average annual wages for non-managerial jobs in Texarkana is $29,608. Average annual wages in Texarkana for jobs classified as manufacturing and industrial jobs range between $32,000 and $37,000. This compares favorably with the typical service sector jobs in Texarkana that pay in the mid-$20,000 range. Buddy Allen, Mill Manager of Domtar Paper mill in Ashdown, illustrates the attractive non-managerial wages offered in the industrial sector. He reports that the starting pay for an entry-level job is $10 per hour ($20,000 per year at 50 weeks per year). Not so great, you might think. Well, after a 90 day probationary period, this same employee is given a raise to $18 per hour ($36,000 per year). It gets better. A top machinist can make up to $34 per hour or $68,000 a year. Capital investments made by companies in the Texarkana industrial area are high. This means that the local unit, recipient of these investments, has incentives to stay in Texarkana. Imagine what the capital investments made into the huge complexes operated by Domtar and International Paper implies. Given the investment (and the specialize processes) they are less likely to be able to sell to another company and less likely to want to walk away from their respective investments. Obviously this doesn’t guarantee they won’t leave town, but it is more likely they will remain with us. The nature of most of these capital investments (secondary market value is extremely low) creates great incentives for organizations to use what they have rather than starting from scratch at another location. Cooper Tire illustrates this point. About the time I was moving to Texarkana there was great weeping and gnashing of teeth by many because of a possible closing or significant downsizing of our local plant. We now know what happened. Rather than close the Texarkana plant, Cooper Tire turned it into a flex plant – specializing in higher-end tires, with the ability to produce a wide array of tires, in small quantities, with shorter switching times, allowing for relatively favorable cost points. Ultimately, this may have just given them a longer life in Texarkana. These companies are also great neighbors. In addition to the high-wage employment they offer, they pay taxes to our local community and make philanthropic donations – both of these stay in our community. For example, James Henry Russell, superintendant of the Texarkana Independent School District, reports that the local Alcoa plant is the district’s number one tax payer at $110,070,450 for fiscal year 2007-08. As a parent of a TISD student, thank you Alcoa! Mary Wormington of the local United Way office says that Alcoa, Cooper Tire, Domtar, and International Paper were among the Top 10 contributors to this year’s million dollar campaign. She reminds me that 99.7% of every dollar donated stays in Texarkana. I’m sure that our citizens who receive services from these firm’s donations are appreciative. As the Dean of the College of Business, I’m enamored of entrepreneurial success stories. Our large local industrial companies offer opportunities to local businesses who think entrepreneurially to partner with these large firms. Take First Case and Label, a local firm headed by David Haak. Mr. Haak began his business by providing labels to teachers and schools. Tireless in his pursuit of partnering with Cooper, Mr. Haak finally won his first order for tire labels (they are legally required to be affixed to every tire sold) because his company was able to provide labels to Cooper when the incumbent could not. And what did Mr. Haak do with this opportunity? Today First Tape and Label supplies all four domestic tire plants plus those in China and Mexico. Because of this close partnership, Mr. Haak’s company developed an adhesive that gives his firm a competitive advantage and now supplies other tire makers such as Pirelli, Yokohama, and Toyo and to other industries such as steel, food, and automotive. How close of a partnership? David Haak tells all who will listen, “I work for Cooper Tire.” We hope that this column has given you a renewed appreciation for Texarkana’s industrial sector. As you follow the Texarkana Industrial Index, think about the benefits Texarkana reaps from hosting these outlets and those businesses that serve them. I hope you join me in wishing our economic development people well. Their success is good for Texarkana. I’d love to hear what you think. Email me at Edward.Bashaw@tamut.edu.
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The Importance of the Industrial Sector in Texarkana
The Importance of the Industrial Sector in Texarkana This article originally appeared in the Texarkana Gazette on May 11, 2008 Business Matters Dr. Ed Bashaw, Dean, Texas A&M-Texarkana College of Business Last month we launched and introduced the Texarkana Industrial Index (TII) to the Texarkana business community. I write this month to explain the value of the industrial sector to the Texarkana market and to give some examples in Texarkana that illustrate this sector’s local significance. I know that the goal of our local economic development folks is to enhance our local environment such that it enables expansion in existing firms and the market entrance into Texarkana of new firms. They do so for good reason. For example, based on 2006 data provided by the Bureau of Labor Statistics, the average annual wages for non-managerial jobs in Texarkana is $29,608. Average annual wages in Texarkana for jobs classified as manufacturing and industrial jobs range between $32,000 and $37,000. This compares favorably with the typical service sector jobs in Texarkana that pay in the mid-$20,000 range. Buddy Allen, Mill Manager of Domtar Paper mill in Ashdown, illustrates the attractive non-managerial wages offered in the industrial sector. He reports that the starting pay for an entry-level job is $10 per hour ($20,000 per year at 50 weeks per year). Not so great, you might think. Well, after a 90 day probationary period, this same employee is given a raise to $18 per hour ($36,000 per year). It gets better. A top machinist can make up to $34 per hour or $68,000 a year. Capital investments made by companies in the Texarkana industrial area are high. This means that the local unit, recipient of these investments, has incentives to stay in Texarkana. Imagine what the capital investments made into the huge complexes operated by Domtar and International Paper implies. Given the investment (and the specialize processes) they are less likely to be able to sell to another company and less likely to want to walk away from their respective investments. Obviously this doesn’t guarantee they won’t leave town, but it is more likely they will remain with us. The nature of most of these capital investments (secondary market value is extremely low) creates great incentives for organizations to use what they have rather than starting from scratch at another location. Cooper Tire illustrates this point. About the time I was moving to Texarkana there was great weeping and gnashing of teeth by many because of a possible closing or significant downsizing of our local plant. We now know what happened. Rather than close the Texarkana plant, Cooper Tire turned it into a flex plant – specializing in higher-end tires, with the ability to produce a wide array of tires, in small quantities, with shorter switching times, allowing for relatively favorable cost points. Ultimately, this may have just given them a longer life in Texarkana. These companies are also great neighbors. In addition to the high-wage employment they offer, they pay taxes to our local community and make philanthropic donations – both of these stay in our community. For example, James Henry Russell, superintendant of the Texarkana Independent School District, reports that the local Alcoa plant is the district’s number one tax payer at $110,070,450 for fiscal year 2007-08. As a parent of a TISD student, thank you Alcoa! Mary Wormington of the local United Way office says that Alcoa, Cooper Tire, Domtar, and International Paper were among the Top 10 contributors to this year’s million dollar campaign. She reminds me that 99.7% of every dollar donated stays in Texarkana. I’m sure that our citizens who receive services from these firm’s donations are appreciative. As the Dean of the College of Business, I’m enamored of entrepreneurial success stories. Our large local industrial companies offer opportunities to local businesses who think entrepreneurially to partner with these large firms. Take First Case and Label, a local firm headed by David Haak. Mr. Haak began his business by providing labels to teachers and schools. Tireless in his pursuit of partnering with Cooper, Mr. Haak finally won his first order for tire labels (they are legally required to be affixed to every tire sold) because his company was able to provide labels to Cooper when the incumbent could not. And what did Mr. Haak do with this opportunity? Today First Tape and Label supplies all four domestic tire plants plus those in China and Mexico. Because of this close partnership, Mr. Haak’s company developed an adhesive that gives his firm a competitive advantage and now supplies other tire makers such as Pirelli, Yokohama, and Toyo and to other industries such as steel, food, and automotive. How close of a partnership? David Haak tells all who will listen, “I work for Cooper Tire.” We hope that this column has given you a renewed appreciation for Texarkana’s industrial sector. As you follow the Texarkana Industrial Index, think about the benefits Texarkana reaps from hosting these outlets and those businesses that serve them. I hope you join me in wishing our economic development people well. Their success is good for Texarkana. I’d love to hear what you think. Email me at Edward.Bashaw@tamut.edu.
TOP