Businesses Flock to Dallas
J.R. and the rest of the Ewing family may be winding down their stay in Dallas - the next television season is rumored to be their last - but they are being replaced by a second wave of major corporate relocations. Once again, companies are finding Texas's second-largest city to be an efficient and inexpensive spot from which to direct national operations, and a bargain for their employees' housing to boot.
Throughout the 1970s, Dallas fell under a national spotlight as companies from the Midwest and Northeast decided to pack up and move south. Such corporations as Diamond Shamrock, Kimberly-Clark, the Associates, and National Gypsum, decided to leave snow, saturated markets, and high operating costs behind, and make their new home in ``Big D.''
But by the time American Airlines moved here - actually, to Fort Worth - from New York in 1979, Dallas was in its own boom, costs were up, and the attraction was no longer so great. Not one major corporate relocation took place here through more than two-thirds of the 1980s.
After that hiatus, however, the move is back on. Spurred in part by a rise in corporate mergers and consolidations across the country aimed at cutting costs, but also tied to the many bargains the area offers in office space, labor, and close-in location of affordable housing, companies are again pinpointing Dallas as an attractive city in which to relocate. JC Penney moved here from New York last year, GTE is consolidating its telephone operations here, with possibly a bigger move from Connecticut in store. Fujitsu is also undertaking a major relocation and consolidation from San Jose, Calif.
Now Sears is considering moving a key merchandising division out of Chicago, and Dallas is one of the cities on the giant retailer's relocation short list.
``Sears is being eaten alive by Mr. Sam Walton [owner of Wal-Mart and Sam's Wholesale Club stores],'' notes Southern Methodist University economist Bernard Weinstein. ``They couldn't have helped but notice the tremendous savings Penney realized by coming here from Manhattan.''
According to Penney spokesman Duncan Muir, the national retailer will save $40 million to $50 million annually in administrative costs as a result of the move. ``That was undoubtedly No. 1 on the list of factors that made Dallas attractive,'' Mr. Muir says. He adds that the city's location toward the center of the country was another important point in its favor. The importance of a geographic location close to transnational shipping routes and readily accessible to all major national markets is perhaps one reason Houston, farther south, has not benefited from a similar burst of relocations.
Also on Penney's list favoring Dallas, though less important according to Muir, were low housing costs - and the close-in housing.
`TO afford housing in New York, our employees often had to endure a two-hour commute,'' says Muir. ``It was a major problem for us when trying to attract employees from the field to corporate headquarters.''
A 20-minute to half-hour commute is now more common for employees at Penney's temporary quarters in north Dallas, Muir says, adding that a 15-minute commute will be common among employees when the permanent headquarters opens in Plano, north of Dallas, in 1993.
Housing costs, while generally not at the top of corporations' lists of reasons for seeking a move, are nevertheless an important factor in bringing along valued employees - and when considering future employee needs.
Fujitsu employees moving here from San Jose will be leaving the nation's highest-priced housing market, the San Francisco Bay Area, for one of its more affordable metropolitan areas. The National Association of Realtors pegs the Bay Area's median existing-home resale price at $243,900 - up a third from a year ago - while the median in Dallas is $88,900, up only 2.7 percent over last year.
``Upper management people are astounded at the deals they can get here,'' says Harden Wiedemann, managing director of a Dallas investment banking operation and long involved in Texas economic development. ``They're finding that for $250,000 they can own what on the East Coast would cost more than a million - and that probably goes doubly for the West Coast now.''
But it's not just upper management that companies are worried about. Donald Hicks, a vice-president and research analyst for the North Texas Commission, says companies, especially those in high-technology fields, are concerned first and foremost about access to skilled labor.
``They'll endure the high operating costs if it means they're where the skilled employees are,'' says Dr. Hicks. ``But it also means they have to be in a place such skilled workers feel they can afford to live.''