Texas Border Business
Texas is one of the top US states for private-sector defense industries, with hundreds of firms engaged in businesses ranging from land and sea defense systems to cybersecurity. In addition to the presence of large companies, the state has developed a robust supply chain network of smaller entities providing key input goods and services. These firms play a crucial role in national defense and global security. They also generate substantial economic benefits through their operations, including well-paying jobs (more than 40% higher than the regional average) and opportunities for other businesses across the state.
We recently did a deep dive into the economic and fiscal impact of private-sector defense firms in Dallas-Fort Worth and the remainder of the North Texas Region, which has the state’s highest concentration and is a major center for the industry. The full report, which was organized by the North Texas Commission, is available on our website.
North Texas has been home to major private-sector defense entities for decades dating back to 1940 and the preparations for World War II. The largest firms include Lockheed Martin, Bell Textron, RTX (the parent company of Raytheon and Collins Aerospace), L3 Harris, Elbit Systems, Northrop Grumman, Boeing, and BAE Systems, with numerous other smaller firms also located throughout the region.
Any economic stimulus leads to dynamic responses across the economy. We have developed and maintained complex and comprehensive models for almost five decades to measure these dynamic responses to estimate the total economic effects (not only direct, but also indirect and induced) associated with various sources of stimulus. We estimate that, when multiplier effects are considered, private-sector defense firms generate some $35.3 billion in annual gross product and approximately 264,600 jobs across the North Texas Region. Even in the area’s large and diverse economy, these effects are significant, and the jobs pay well. Several companies are in the midst of notable expansions, which will further increase their role in the future.
Business activity generates tax receipts through channels such as taxable retail sales, hotel occupancy taxes, and higher property values. We estimate that the increase in economic activity associated with private defense companies generates annual tax revenue of almost $1.8 billion to the State of Texas and $1.5 billion to local entities in the North Texas region.
Beyond its invaluable role in providing resources which are critical to our national security, the private-sector defense industry generates jobs for individuals and opportunities for other local businesses not only in North Texas, but in cities across the state. The sector is poised to remain a vital source of economic activity for decades to come, adding to the substantial economic benefits of military bases and related operations around the state. Stay safe!
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Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of more than 3,000 clients over the past four decades.
