Local incentives attract manufacturing jobs to Conroe

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Job growth in Conroe is outpacing Houston-area employment growth—especially in the manufacturing industry, which employs the most people of all local private sectors, according to a 2017 report by the Greater Conroe Economic Development Council. On the other hand, the U.S. Bureau of Labor Statistics shows growth in the tech sector has been fairly stagnant in comparison.

Thirteen of Conroe’s top companies—those that employ more than 100—are in its manufacturing sector in 2018, which is the most top employers in any one sector citywide according to the GCEDC. Only two sectors in Conroe employ more workers than manufacturing: public agencies—including the city of Conroe, Montgomery County and the San Jacinto River Authority—and education, which is solely Conroe ISD.

In October, energy industry materials supplier Tenaris restarted its Conroe plant at Hwy. 105 and FM 3083 after a three-year suspension of activity, bringing 100 jobs to the area.

“Our Conroe facility is playing an important role in the resurgence of U.S. manufacturing,” Tenaris U.S. President Luca Zanotti said in a press release.

Meanwhile, Conroe Industrial Park North is home to seven of the top 13 manufacturing employers. With 27 total businesses already having claimed space in the industrial park, which has been growing its footprint since the 1990s, the city spent $23 million to add another 610 acres to it spring 2018.

Officials said nearly all the companies in the park used local incentives available to new or expanding businesses relocating to the area.

“We’re definitely adding jobs [in manufacturing and skilled trades],” GCEDC Executive Director Danielle Scheiner said. “We’re seeing manufacturing has not gone away—these are continuing to add jobs—and [seeing]even some businesses already here grow and expand.”

Three miles away, the Deison Technology Park stands empty despite $14.5 million spent on the facility and citywide incentives that work well to attract manufacturing business. The tech park has been open since 2013 but has yet to sign a single tenant, although officials say they have received calls of interest.

“I hope 2019 will bring us our first project in the Deison Technology Park,” Conroe Mayor Toby Powell said.

Jobs in the parks

The Conroe Industrial Development Corp. owns the industrial and technology parks, designed to complement each other, and works in partnership with the GCEDC under the supervision of the Conroe City Council to attract and retain business. Both parks’ funding comes from a half-cent sales tax revenue distributed by the CIDC, but officials could not confirm exact numbers invested in the industrial park.

Scheiner said since land has been added onto the industrial park and it is still expanding infrastructure too, costs are difficult to calculate. She said the land is priced according to estimated costs as the park expands.

“The [industrial park]land pricing has always covered the city’s cost in the investment and has increased over the years,” Scheiner said.

Property at the industrial park is listed at $2.55 per square foot, compared to $4.50 at the tech park.

The industrial park is 85 percent sold and businesses there are associated with about 3,000 direct and indirect jobs, CIDC President Paul Virgadamo said.

In October, FedEx agreed to create 96 jobs in Conroe Park North after a total capital investment of $18 million, and another unannounced freight company plans to add 87 jobs with an investment of more than $12 million, Powell said. The FedEx project is slated for a December completion.

“Now in our technology park, we talked to several people that are showing an interest; they just haven’t pulled the trigger yet,” said Powell, who is also a member on the CIDC board of directors. “We’re probably one of two sites they’re interested in right now.”

Scheiner said the tech park has had a healthy prospect pipeline all along, but selling the land is about finding the right fit. Virgadamo said the tech park is empty compared to the booming industrial park because each were intended to house select types of businesses.

“The industrial park was designed for industrial purposes,” Virgadamo said. “The tech park was designed for research and corporate relocation, not the industrial side. We won’t put an industrial person in the tech park. We’re going to be very particular in what goes in the tech park—we want research and development, corporate relocation, those sorts of businesses.”

Powell said prospective employers in the tech park are considering office spaces ranging from 700,000-1 million square feet, bringing anywhere from 175-1,000 jobs and $80 million-$200 million in capital investments.

Incentivizing growth

Powell said manufacturing companies offer great amenities and salaries.

The average annual manufacturing wage in Montgomery County is $69,940 as of the second quarter of 2018, according to the Greater Houston Partnership. Mean earnings for full-time, year-round workers in 2017 in Conroe were $59,497, according to the U.S. Census Bureau.

“One reason why we’re doing well [in manufacturing job growth is]we have a great incentive program—most all the companies that come into our park utilize some portion of our incentive or abatement programs,” Powell said.

Local public agencies supply economic incentives to qualifying new, relocating or expanding companies to support economic growth, including county and city property tax abatements, municipal and county loans and grants, enterprise and foreign trade zones, performance-based cash incentives and freeport exemptions.

“Of the businesses we’ve worked with, probably half of them [have used incentives],” Scheiner said. “Our local officials have been very responsible with the tax dollars that are used to support these programs and can definitely show where the benefit is. It helps the economy locally; there’s definitely a [return on investment].”

Based on a 2012-16 GCEDC study, Conroe expects to collect $2.8 million per year in new taxes from incentives bringing in new businesses—a 47 percent return on public investment.

However, Chapter 312 of the Texas tax code—which allows municipalities to offer property tax abatement incentives—expires Sept. 1, 2019, and there has been discussion surrounding not renewing it, said Scheiner, who also sits on the board of the Texas Economic Development Council.

“Our position is we’d prefer—we’re not asking for anything additional—we just would like for tools in the tool box to be left alone,” Scheiner said. “Everything we do here is very above-board, and since it’s performance-based, [the businesses]have to perform or don’t get access [to incentives]anyway.”

Montgomery area growth

Industrial growth and economic incentives are taking place outside Conroe city limits as well.

Levi Love is the president of Montgomery-based L Squared Engineering, which employs engineers and computer-aided designers for civil engineering, commercial site development and construction management.

Although L Squared did not use any city incentives when it started up as a three-person firm in 2011—it now employs 12—Love said he often is involved in helping his developer clientele secure incentives in Montgomery.

For example, he helped the incoming retail strip Shoppes of Montgomery secure Chapter 380 Agreement incentives to have a portion of the cost of utility installation reimbursed by the city through tax abatements. The center’s anchor and first tenant is CVS pharmacy, slated for completion spring 2019.

Love said he has seen a 50 percent increase in new contracts over the past three months, but has had no trouble filling those skilled trades positions from the local talent pool.

“The growth we’ve seen has been well-planned, steady growth, and we’ve seen it in all sectors,” Love said. “It’s usually very balanced growth in Montgomery. It’s very sustainable, and I think that’s got to be good for businesses that want to come out—to see the steady growth is something they can count on with some degree of certainty. I think that makes Montgomery a good place to do business.”

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Jules Rogers
Originally from the Pacific Northwest, Jules Rogers has been covering community journalism and urban trade news since 2014. She moved to Houston in June 2018 to become an editor with Community Impact Newspaper after four years of reporting for various newspapers affiliated with the Portland Tribune in Oregon, including two years at the Portland Business Tribune. Before that, Jules spent time reporting for the Grants Pass Daily Courier in Southern Oregon. Her favorite beats to cover are business, economic development and urban planning.
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