Business expansion drives most of S.A.'s job growth

One of the most valuable pieces of information a city can possess is where jobs come from.

Do most jobs come from startups, expansions of existing companies or from companies that are relocating from elsewhere?

San Antonio recently went through a one-year process of developing an export strategy, thanks to the Washington, D.C.-based Brookings Institution's Metropolitan Export Initiative.

In its research, Brookings has determined that U.S. jobs were created between 2003 and 2010 in the following categories:

56.3 percent from startup companies.

41.8 percent from existing business expansions.

1.9 percent from companies that are moving or placing new investments in an additional location.

The message is clear. Cities compete for the 1.9 percent of job growth that stems from relocations, which mostly exists when cities “steal” companies from other cities, said Marek Gootman, Brookings' strategic partnerships director.

Cities and their states offer massive cash incentives and tax breaks to tear companies away from other cities and states, but it's for only a small piece of the job-creation pie, Gootman said.

Individual cities differ from the overall national statistics. San Antonio's job-creation picture, in contrast, looked like this, again from a 2003-10 analysis by Brookings:

33.72 percent, or 41,013 jobs, for startup companies, lower than the U.S. rate of 56.3 percent.

58.55 percent, or 71,251 jobs, for existing business expansion, higher than the U.S. rate of 41.8 percent.

7.69 percent, or 9,353 jobs, for relocations, higher than the U.S. rate of 1.9 percent. (The percentages do not add up precisely to 100 percent because of rounding.)

The implications are not difficult to determine. San Antonio performs poorly for startups compared with the rest of the country. This is despite numerous organizations available to assist new companies to start and survive early challenges. Barriers might include lack of startup financing, either bank loans or low availability of venture capital.

Expansion of existing companies was by far the biggest source of job growth locally, more than half of all new jobs during the period. This happened despite the departure of AT&T Inc. when it moved its headquarters to Dallas in 2008. Since 2010, the San Antonio Economic Development Foundation has added a retention function to its previous role of seeking only new outside business investments.

San Antonio does quite well with new outside business investments. The number of 9,353 new-investment jobs between 2003 and 2010 actually might be low. Toyota Motor Corp. opened its assembly plant during the period. The percentage probably is holding up since 2010 because of the Eagle Ford Shale drilling activity.

What should San Antonio do? The city needs to shore up assistance for startups. The city's coming Café Commerce might help. San Antonio could widen its business retention program, too, because it is a gusher of jobs.

As it happens, San Antonio sits at a decision crossroads. The Economic Development Foundation recently received a new jobs-creation plan written by the giant consulting firm Deloitte. But the foundation is keeping the plan under wraps until it can prioritize the recommendations.

The Brookings numbers should be a critical guide in that regard.

dhendricks@express-news.net