They offer generous incentive packages to offset the high cost of a project. There are workforce training programs to help companies prepare their employees to be productive from the first day of operations.

Many cities and regions in the Southwest have young, dynamic populations, meaning there is a ready workforce. Plus, these cities and regions are home to tens of thousands of individuals transplanted from other regions of the country.

The cost of labor and land are inexpensive, compared with other parts of the country, and several states in the region have right-to-work laws.

“Companies are looking for locations where there are less regulations and lower costs,” says Mario Hernandez, president at San Antonio Economic Development Foundation.

Diversity helps maintain job growth

The downturn in the U.S. economy hasn’t stopped the San Antonio metro area from producing jobs. The metro area expects to create nearly 5,000 new jobs in 2011, compared with more than 4,100 in 2010, Hernandez says. More than 11,000 jobs have been created during the past three years, which is about what the metro area was averaging when the economy was in better shape.

“The diversity of our economy is very attractive to companies,” Hernandez says. “San Antonio jumps to the top, or near the top, of many site location projects.”

This diversity is reflected in the cross-section of industries that locate projects in the metro area.

High-level back-office operations continue to grow in San Antonio, including PETCO, which recently opened its North American Professional Service Center there.

Hernandez points to labor, connectivity, and costs as the primary reasons.

There have also been expansion projects related to information technology and cybersecurity. The metro area benefits from the presence of the National Security Agency’s Texas Cryptology Center and the U.S. Air Force Cyber Command. The presence of these military operations has helped San Antonio attract more than 80 private companies in the field.

From a logistical standpoint, San Antonio can offer a lower-cost alternative to bringing off-shore cargo into the U.S. by avoiding the more congested California ports, Hernandez says.

The metro area is attempting to link with seaports on Mexico’s western coast in an effort to provide an alternative route for companies with manufacturing operations in China to ship their product to the U.S. After being unloaded at a Mexican port, product would be shipped via rail to San Antonio and distributed nationwide.

With interstates 10 and 35 intersecting in San Antonio, companies can ship product to both coasts and to the Canadian border from the metro area. Hernandez estimates that companies can save two to three days of logistics times distributing through San Antonio compared with bringing product into the U.S. through West Coast ports.

Space to grow in Levelland, Texas

Space is the major strength for companies considering an expansion or relocation to Levelland, Texas, located about 300 miles west of Dallas. “We have relatively inexpensive land costs, with room to develop,” says Dave Quinn, executive director at Levelland Economic Development Corp., adding that the region is ideal for companies looking to locate in Texas but at a lower cost of living and doing business and without the congestion and hassles of cities such as Dallas, Houston, or San Antonio.

Levelland is in a region that also includes the cities of Lubbock, Midland, Odessa, and Amarillo, giving expanding companies a greater talent pool from which to choose their workforces.

The region is a traditional home to oil and gas operations. A large portion of exploration wells and petroleum refining facilities are within a 500-mile radius of Levelland. The region is trying to build on that energy experience by growing clusters of alternative energy companies, including wind energy, solar energy, and biofuel.

“Our workforce is strong in the traditional energy sector,” Quinn points out. “There are numerous machinists and welders in the region, as well. We believe that this transitions us naturally into alternative energy when you’re talking about maintenance and construction of the wind farms, as well as the maintenance of turbines and other parts.”

In addition, Levelland is home to numerous headquarters operations, value-added agriculture companies, and distribution and logistics operations.

The region is also a part of the Southwest Power Pool, a regulated utility market which gives companies, on average, lower utility rates than in other parts of Texas, Quinn says, because most of the rest of the state is unregulated.

Both sides of the border

South Rio comprises the four southern-most counties in Texas, with a population of 1.3 million, according to the 2010 U.S. Census. Moreover, there is an additional 1.2 million residents on the Mexican side of the border, meaning companies have a substantial workforce at their disposal.

“We have an average age of 29.6 in our population,” says Raudel Garza, executive director at South Rio Economic Council. “We have an available workforce.”

Colleges and universities in South Rio offer numerous workforce training programs in manufacturing, renewable energy, and industrial engineering.

Nearly 600 manufacturers operate facilities on both sides of the border, including in industries such as automotive, aerospace, electronics, medical device, metal products fabrication, and renewable energy.

U.S. Customs programs, focused on pre-screening individuals, make it easy to travel across the border on a daily basis.

“Many U.S.-based manufacturers are doing business in Northern Mexico,” Garza says. “The management lives on the U.S. side and travel over the border every day. The talent pool is coming from local universities.”

There are many logistical advantages to South Rio, Garza points out.

The region is served by large divided highways and interstates, as well as the I-69 corridor.

Union Pacific and Burlington Northern have rail operations in South Rio, and there are two deepwater (Isabel and Brownsville) and two shallow (Mansfield and Harlingen) ports in the region.

There are 13 international crossing and numerous foreign trade zones.

Working with the California market

Oftentimes, states, in their attempts to lure a company’s expansion or relocation project, will talk up their own benefits to the detriment of the company’s current location. This is especially true when states are attempting to convince a California company to relocate.

But a new organization in Arizona is taking the opposite approach in its relationship with California.

“Our philosophy is to promote a relationship with the California market,” says Barry Broome, president and CEO at Greater Phoenix Economic Council (GPEC), the lead partner organization of Sun Corridor Partnership. “It makes more sense to build a system in which we interface with California.”

The objective of Sun Corridor Partnership, composed of GPEC, the Greater Yuma Economic Development Corporation, Tucson Regional Economic Opportunities, Inc., and the City of Flagstaff and Pinal County, is to advance the collective interest in bringing business to the region. Sun Corridor, equivalent in size and population to the state of Indiana, is one of only 10 U.S. markets expected to see most of the nation’s population growth during the next 35 years.

“The key is the attitude and intellectual approach we take,” Broome says. “We’re not poaching. What we want is a trade-and-commerce relationship.

“Sometimes, a company will leave Arizona to go to California; sometimes a company will leave California for Arizona,” he adds. “There are small tech company spinouts from Silicon Valley that come to Arizona because it is a logical place for a startup company to emerge.”

Sun Corridor promotes the fact that there are overwhelming similarities—such as cultural, business-wise, and demographics—between Arizona and California, in addition to proximity. “If you need 100 executives to leave Los Angeles to run an operation, going to Phoenix is not that much of a cultural leap,” Broome says. “Both [California and Arizona] are very good at digesting new residents, especially people from around the world.”

Since it promotes itself as a partnership, Broome says it is in Arizona’s best interest to have a healthy California economy.

“Other states can go into California and hammer it out over costs and other issues, because they are not tied to its success,” Broome says. “We’re dependent on California. Economically, we need California to recover as much as we need ourselves to recover. That’s why we have a more collaborative, less hostile approach.”

How will Sun Corridor measure success? “The ultimate way to measure is how many California companies invest in Arizona, and how many Arizona companies have a foothold in California,” Broome points out. “Then, you’re getting into where [the two states] acknowledge that they have a natural combined market.” wt