COMMENTARY | Silicon Valley in California has long been synonymous with high tech innovation and strength. But that image took a hit recently, thanks to a recent report that revealed that Texas has surpassed California in technology exports.
According to the Dallas Morning News:
“Companies in Texas making semiconductors, telecommunications devices, computers, and other items shipped more than $45 billion in products to other countries in 2012, according to a report by the TechAmerica Foundation, a lobbying and advocacy firm representing the technology industries. That’s a $3 billion rise from 2011.
“Tech from Texas most often goes to Mexico- companies in the state shipped $22 billion south of the border in 2012. All that trade supported 331,000 jobs in Texas, the report said, also the most of any state. Texas has 22 percent of the nation’s technology manufacturing jobs.”
By contrast California exported $44.8 billion in high tech products in 2012, down three percent from the previous year.
The reason Texas is surpassing California in manufacturing and exporting tech is rather obvious. Texas is a far better place to do business than the Golden State, thanks to lower taxes and regulations. Labor costs are far greater in California than in Texas, which is reflected in a shift to the Lone Star State of high tech manufacturing. Companies that remain in California retain a capital intensive, but labor cheap product design sector. But will that change as well?
California has a lot to recommend it due to climate and a certain laid back culture. But government in that state, whether in Sacramento or on the local level, tends to be big and intrusive. Eventually massive taxes and annoying government regulations will drive the engineers and researchers who create new products like the latest iPad to more friendly locales. Texas weather may not be as friendly as that in California and its political culture may be more conservative, but it is a better place to do business. Unless California wakes up and decides to be more nurturing to business, it may lose the rest of its high tech industry as well.