A SHORT HISTORY OF AUSTIN'S ECONOMIC DEVELOPMENT
Vic Mathias - manager of the Austin Chamber of Commerce from 1956 to 1982. Depending on your point of view, he was one of the social architects, godfathers, or grandfathers of modern Austin. He was among its first captains of industrial recruitment.
Before and during the second World War, Austin was largely a "government town", with major employers being state government, the University of Texas, and (after the war began) the military at Bergstrom Air Force Base. How this laid-back college town was welded into a paragon of the Information Age over the last 60 years is incredible.
The next surge of economic development was pushed by the Chamber of Commerce, and began about 1955. That year, the Chamber boosted its budget to include industrial recruitment.
This direction was a sharp departure for the Chamber. In the mid-50's, agriculture was still considered a major source of revenue in the area. It was considered a recruitment accomplishment if statewide trade organizations could be persuaded to establish their headquarters in Austin.
The Chamber's interest was in part due to Vic Mathias, who became President in 1956. In an interview with this author, Mathias stated the effort was partially motivated by the wish to have jobs for UT graduates that were moving away in droves ("our biggest export"), to create enough jobs so that people's children and grandchildren did not move away, and to create a private sector tax base to offset the massive amount of tax-exempt government property then in Austin.
Mathias said electronics was chosen as a desired industry because it would be more accepted by the present population, since these proposed industries were located in buildings that looked a lot like the campuses Austinites were familiar with. It was, he said, a clean (not a smoke-stack) industry. He observed that some of the things that attracted these industries to Austin were the quality of life and low taxes in the state.
The Chamber began reshaping itself for a major long-term effort. It began budgeting for recruitment. In all of 1954 it only budgeted $1,143 for this purpose - in 1955 it received a major increase to $15,000 (both in nominal dollars). Over the next decade, the Chamber established itself as the recruitment center for Central Texas, with the electronics industry as a prime target.
Chamber activities in 1955 included a tour for Eastern industrialists of Austin's various college and technical research facilities. Among the hosts of the tour were the PR director of the Balcones Research Center and the editor of Austin's newspaper, the American Statesman. In 1956 the Chamber began distributing 7,000 educational pamphlets to industrialists around the U.S.
In 1957, the Chamber commissioned the UT Bureau or Business Research to determine the type of businesses that would fit in Austin. The study recommended several directions: poultry farming, air conditioning equipment, and research and development of electronics.
In 1958, a special tabloid, Austin's invitation to industry, was mailed to 1,500 industrialists. Stickers promoting growth were sent to Chamber members to put on their business windows. Road signs beseeched capitalists to "Locate Your Plant in Austin". And presentations were made to all manner of decision makers and civic groups to sell Austinites themselves on this new course. The next year 5,000 brochures and letters were mailed to the electronics industry; the Chamber also started Austin Magazine, at that time dedicated to economic development of the Austin area.
In 1960 the Chamber reviewed a plan to create an industrial park for Austin; so ardent was its pursuit that if such a site was not developed through private funding, the organization pledged to develop the site by itself. Parade Magazine focused on Austin, and the Chamber distributed the article to 25,000 industrialists nationally.
In 1961 the Chamber established a 3-year special fund totaling $40,000 per year ($231,000 per year in 2001 dollars). This budget included brochures, prospect letters, mailing, research materials, travel, and media advertising in business publications. Typical of the era's promotion was an ad reading "Austin - in the shadow of Gemini," which boasted of the city's links to NASA research and the technical talent of the University of Texas.
In 1962, the Chamber began a unique type of economic development outreach and promotion, a summer recreational extravaganza called Aqua Fest. Most people believed it to be an event of cultural and civic pride; but according to Austin Magazine, the original design of the festival was to promote Austin's abundant water resources available for industry to the rest of the country.
This multi-day event, which took place annually in the dog days of August until 1998, featured street and river parades, air exhibitions at the former Bergstrom Air Force Base, and several nights of ethnic food and entertainment at Auditorium Shores park on Town Lake. Ed McMahon, former MC of the Tonight Show, attended for several years and gave glowing reports on national TV. Aqua Fest "royalty" (queens and princesses) would attend other festivals throughout the state and country, often appearing at the Cotton Bowl.
Chamber involvement in political issues was primitive by today's standards, but aggressive and pervasive for its time. It supported bonds for an expanded airport terminal and a 65% increase in electric power capacity, and lobbied for the Right-to-Work labor law. It advocated for Mopac Expressway. In 1962 it began its advocacy for a junior college, which was actually formed 12 years later as Austin Community College. The Chamber served as the official publicity group for the Austin Transportation Study (which today is an exclusively governmental body).
The Chamber offered political training to its members and urged participation by their membership in local elections.
Also key to the recruitment effort was an effort to "brand" Austin. The Chamber wanted the country to see it as a town where "quality of life" was offered to employees of science-related companies. An article in Austin Magazine in 1964 stated, "Austin is primarily a city of upper middle-class citizens".
The Austin Magazine article further extolled the scenic countryside surrounding Austin; the cultural amenities such as plays, libraries, sports, and conferences; the recreational opportunities due to climate and geography (e.g., water sports); and the advantages of raising a family in the area.
Another part of the Austin "brand" was the concept of "non-pollutive industries". These words had several meanings. Some, like Vic Mathias, thought that "smokestack industries" such as steel and oil, would not be accepted in Austin, whereas electronics manufacture was believed to be relatively benign.
There were some initial recruitment successes: Industrial Instruments, Johnson Controls, Austron, and Houston Instruments.
The IBM plant was Austin' first game in the major leagues. Originally it manufactured Selectric typewriters, and only employed 300 people. But IBM bacame one of the top 10 employers in Austin and remains so today. Seven other companies located in Austin just to supply it. Serendipitously, it would become a pivotal anchor for the software industry 2 decades later, something no one could have foreseen. Currently, it employs between 7,000-8,000 people.
But much more was in store for Austin's recruitment efforts after IBM put it on the map: Infotronics and Communications Research in 1967, Texas Instruments in 1968, Westinghouse in 1971. In 1972 the Chamber assisted Seguin in recruiting a Motorola branch plant that made auto parts. The contacts and experience paid off when they lured a Motorola branch plant to Austin 2 years later to make semiconductors.
In 1975 the Chamber lured Eagle Signal, which made computerized traffic-control systems. This was a significant accomplishment because they had been trying to recruit this company for 6 years! In 1978 it landed Data General and Advanced Micro Devices. And all the while, companies that had already arrived were expanding and spinning off new companies. By 1978, 11% of all jobs in the area were manufacturing related, up from an estimated 2% when the effort first began about 20 years earlier.
In 1981 there were 8 major companies that moved plants to the region, including Tandem Computer, Fisher Controls, Schlumberger, and Lockheed. There was also Motorola's expansion of a semiconductor plant in Oak Hill. The Chamber estimated that the 25,000 jobs it had helped create since 1965 had employed more than 75,000 other people (with a 3 to 1 multiplier for indirect jobs).
This article reproduced in part with kind permission of the author, Paul Robbins, copyright 2003. "The Town that Won the Pennant, A Short History of Austin's Economic Development"
