CHAPTER 11
ECONOMIC DEVELOPMENT

Economic Analysis

The purpose of this chapter is to provide the most recent available economic data for the City of Harlingen as of September 2001. Economic data are available from a variety of sources and time horizons. The source and effective date for economic data are documented in the narrative and tables in this chapter. Wherever possible, statistics relating specifically to the City of Harlingen are presented. Some data were available only at the county, Metropolitan Statistical Area (MSA), or zip code level.

Employment and Unemployment

Many industries have moved to the Harlingen area in the past several years. The civilian labor force has been increasing over the years, and so has the number of people employed in Harlingen, as shown in Table 11-1. Additionally, the number of unemployed persons in the City of Harlingen has decreased from 1,955 in 1990 to an annual average of 1,671 in 2000. Figures rating employment for the entire Brownsville-Harlingen MSA indicate a very high unemployment rate. The Texas Labor Market Review's July 2001 edition ranked Texas' 27 Metropolitan Statistical Areas by unemployment rate for the month of July 2001. The Brownsville-Harlingen Metropolitan Statistical Area ranked 26th out of 27 with an unemployment rate of 10.8%. The rate for the City of Harlingen was 6.2% and the rate for the State of Texas was 5.2 %.

Employment Estimates

Nonagricultural Wage and Salary Employment Estimates are monthly employment estimates based on a sample of Texas employers selected through the Current Employment Statistics Program. Employment statistics for the Brownsville-Harlingen MSA are presented in Table 11-2. The total non-farm employment has grown 43.1 percent since 1990, faster than the county growth rate of 28.9 percent. The largest growth in number of employees has been in services, followed by government, particularly local government. These categories include employment in health care and education.

Industrial Classifications

The North American Industry Classification System (NAICS) supersedes the Standard Industrial Classification used in reports from the economic census prior to 1997. While many of the individual SIC industries correspond directly to industries as defined under the NAICS system, most of the higher level groupings do not. Particular care should be taken in comparing data for retail trade, wholesale trade, and manufacturing, which are sector titles used in both NAICS and SIC, but cover somewhat different groups of industries. Because of these changes, it is not be possible to construct time series that include data for points both before and after 1997.

NAICS groups the economy into 20 broad sectors, up from the 10 divisions of the SIC system. Many of the new sectors reflect recognizable parts of SIC divisions, such as the Utilities and Transportation sectors, broken out from the SIC division

Table 11-1
EMPLOYMENT STATISTICS FOR
CAMERON COUNTY AND CITY OF HARLINGEN
1990 AND 2000
Harlingen's Vision 2020 Comprehensive Plan
Harlingen, Texas

           Source: Texas Workforce Commission 2001 "Harlingen City Civilian Labor Force Estimates Actual Series, 1990 - Current"

Table 11-2
BROWNSVILLE-HARLINGEN MSA
NON-AGRICULTURAL EMPLOYMENT
1990-2000
Harlingen's Vision 2020 Comprehensive Plan
Harlingen, Texas

Source: Texas Workforce Commission

Transportation, Communications, and Utilities. Similarly, the SIC division for Service Industries has been subdivided to form several new sectors.

Other sectors represent combinations of pieces from more than one SIC division. The new 'Information' sector includes major components from Transportation, Communications, and Utilities (broadcasting and telecommunications), Manufacturing (publishing), and Services Industries (software publishing, data processing, information services, motion picture and sound recording). The Accommodation and Food services sector puts together hotels and other lodging places from Service Industries and eating and drinking places from Retail Trade.

Figure 11-1
CITY OF HARLINGEN EMPLOYMENT, UNEMPLOYMENT AND
UNEMPLOYMENT RATE
ANNUAL AVERAGES, 1990 TO 2001
Harlingen's Vision 2020 Comprehensive Plan
Harlingen, Texas

Source: Texas Workforce Commission. Harlingen City Civilian Labor Force Estimates Actual Series 1990-Current
* 2001 is July year-to-date average

Comparability of the 1992 and 1997 Economic Censuses

The 1997 Economic Census is the first census to present data based on the new North American Industry Classification System (NAICS). Previous census data were presented according to the Standard Industrial Classification System developed some 60 years ago. Due to this change, comparability between census years is limited.

In 1990, the retail trade industry employed the largest number of people in Harlingen, with 3,722 employees (Table 11-3). The next largest industry in terms of numbers of employees was professionals and related services, which includes health services, educational services. The statistics contained in Table 11-3 use the old Standard Industrial Classification (SIC) industry definitions.

Table 11-3
EMPLOYED PERSONS 16 YEARS AND OVER, BY INDUSTRY
FOR CAMERON COUNTY
1990
Harlingen's Vision 2020 Comprehensive Plan
Harlingen, Texas

Source: (1990 Data from 1995 Report) Texas Employment Commission, UTPA CEED State Data Center Affiliate

US Census' County Business Patterns and Zip Code Business Patterns

Table 11-4 presents data gathered from the US Census' County Business Patterns Zip Code Business Patterns.

ZIP Code Business Patterns presents data on the total number of establishments, employment and payroll for more than 40,000 ZIP Code areas nationwide. In addition, the number of establishments for nine employment-size categories is provided by detailed industry for each ZIP Code. Industry data contained in the US Census' County Business Patterns Zip Code Business Patterns uses the newer North American Industry Classification System (NAICS).

Zip codes 78550, 78551, 78552 and 78553 are associated with the city of Harlingen, according to the United States Postal Service (USPS). Zip codes are networks of streets served by mail carriers or just individual post offices and are a tool for mail delivery. They also change periodically as required to meet USPS operational needs. Table 11-4 is a summary of data gathered from the US Census' County Business Patterns Zip Code Business Patterns Industry for ZIP Codes 78550, 78551, 78552 and 78553 in 1998.

Table 11-5 and 11-6 present payroll data and number of businesses for Cameron County as gathered from the US Census' County Business Patterns 1999 by NAICS Industry Code.

Table 11-4
ESTABLISHMENTS BY INDUSTRY FOR 1998
ZIP CODES 78550, 78551, 78552 AND 78553
HARLINGEN AND SAN BENITO, TX
Harlingen's Vision 2020 Comprehensive Plan
Harlingen, Texas

Source: U.S. Census Bureau County Business Patterns (NAICS) by Zip Code

Table 11-5
CAMERON COUNTY EMPLOYEES, PAYROLL, AND ESTABLISHMENTS BY
INDUSTRY 1999
Harlingen's Vision 2020 Comprehensive Plan
Harlingen, Texas

Note: Employment-size classes are indicated as follows: C-100 to 249; E-250 to 499; H-2,500 to 4,999
Source: U.S. Census Bureau County Business Patterns 1999

Major Employers

The major employers in the Harlingen area are listed in Table 11-7. The top five employers in the city include the Harlingen Consolidated Independent School District, the Valley Baptist Regional Medical Center complex, Fruit of the Loom apparel manufacturing firm, local government, and Walmart. In total, the 44 major employers employ approximately 13,084 employees.

Table 11-6
CAMERON COUNTY TOTAL EMPLOYEES, ESTABLISHMENTS AND PAYROLL
1993 TO 1999
Harlingen's Vision 2020 Comprehensive Plan
Harlingen, Texas

Source: U.S. Census Bureau County Business Patterns 1993 through 1999

Table 11-7
MAJOR EMPLOYERS
CITY OF HARLINGEN
3RD QUARTER 2001
Harlingen's Vision 2020 Comprehensive Plan
Harlingen, Texas

* Information not released
Source: Harlingen Area Chamber of Commerce 9/30/01

Industry Trends and Projections

This section provides information about potential employment growth by industry sector as shown in Table 11-8, and by average annual employment statistics. The primary source for this section is the Standardized Occupational Components for Regional Analysis and Trends in Employment System (SOCRATES), developed by the Career Development Resources (CDR) with technical and data support from the Texas Workforce Commission.

SOCRATES

The objective of the CDR SOCRATES system is to provide the Cameron County Workforce Development Board with a documented, detailed regional economic plan for targeting industries and occupations. The targeting process is not an economic forecasting model, however, it uses employment projections in its analysis.

The two primary sources of data are the Covered Wages and Employment database, derived from Unemployment Insurance (UI) administrative records and the employment projections developed by the TWC Labor Market Information unit.

Industry data for SOCRATES are classified under the Standard Industrial Classification (SIC) coding system.

Industrial Evaluation

One component of SOCRATES is the Industrial Evaluation Model (INDEVAL). INDEVAL aids labor market analysts in prioritizing industries with the greatest employment potential from among an entire regional economy by examining and ranking those industries based on selected economic indicators. For the Cameron County region the following indicators and weightings were chosen:

· Local Employment Change 1997-2000 (15%)

· Local Number Of Establishments Change 1997-2000 (5%)

· Local Employment 1st Qtr 2000 (15%)

· Local Number Of Establishments 1st Qtr 2000 (10%)

· Local Employment Projections 2008 (15%)

· Local TWC Job Openings 1999 (10%)

· Local Average Wages 1st Qtr 2000 (10%)

· Texas Potential New Hires 1999 (10%)

· National Aggregate Hourly Index 1st Qtr 2000 (5%)

· National Employment Projections 2008 (5%)

The final product of the INDEVAL model is an ordered list of industries. These represent industries that are significant to the local economy and that are likely to have an increasing demand for workers, many of whom are still in the education pipeline.

Based on the data and weights presented above, industries in the region were ranked as shown in Table 11-8. With different weightings or alternative analyses a different list would be produced.

Table 11-8
TOP-RANKING INDUSTRIAL EVALUATION (INDEVAL) SECTORS
FOR CAMERON COUNTY
Harlingen's Vision 2020 Comprehensive Plan
Harlingen, Texas

Source: INDEVAL Ranking in Standardized Occupational Components for Regional Analysis and Trends in Employment System (SOCRATES) Cameron Co. Local Workforce Development Board Regional Narrative Labor Market Plan (6/15/2001).

Industry Employment Projections

In 1998 the Cameron County region total employment for all industries was 107,961. That number is expected to grow to 126,269 by the year 2008. That is an expected increase of 18,308, or a 17.0 percent increase in employment. Table 11-9 shows industry employment projections for Cameron County. The industries that reflect the largest projected growth by percent include durable goods manufacturing (23.5 percent) and wholesale trade and government (20.5 and 21.7 percent respectively). The industry with the highest growth in numbers is Services, with a projected increase in employment of 8,254 employees.

Table 11-9
CAMERON CO. WORKFORCE DEVELOPMENT BOARD
INDUSTRY EMPLOYMENT PROJECTIONS
Harlingen's Vision 2020 Comprehensive Plan
Harlingen, Texas

Source: Standardized Occupational Components for Regional Analysis and Trends in Employment
System (SOCRATES); 6/15/2001 Cameron Co. Local Workforce Development Board Regional Narrative Labor Market Plan

International Trade

Texas is the country's second largest exporting state after California. Texas maintained its perennial position as the nation's largest exporting state to Mexico, accounting for 47.6 percent of all US shipments to Mexico in 1999.

Harlingen, located at the southern tip of Texas is a strategic transportation and international trade center with easy access to markets in Texas, Mexico and the world.

A state of the art international bridge (the Los Indios Free Trade Bridge) is located just 10 miles from Harlingen. Harlingen is a 25 percent owner in the bridge in a partnership with the San Benito (25 percent) and Cameron County (50 percent). This four-lane international crossing is one of the largest and most modern ports of entry in South Texas. In 2000, there were 511,937 Free Trade Bridge crossings into Mexico. (Harlingen Area Chamber of Commerce)

Texas A&M International University provides border trade data that track the flow of U.S.-Mexico goods by U.S. Customs border ports and commodity code on a monthly basis. The U.S.-Mexico trade activity through Port 01 represents a compilation of all ports of entry in Cameron County and all modes of export (for example air, truck and rail). U.S.-Mexico exports through Port 01 totaled nearly $6.3 billion U.S. Dollars in 2000.

Major Export Commodities

In 2000, Texas' exports to Mexico totaled nearly $52 billion US dollars. Table 11-9 shows total dollar amounts by industry for Texas exports to Mexico in 2000.

Table 11-9
STATE OF TEXAS EXPORTS TO MEXICO
2000
Harlingen's Vision 2020 Comprehensive Plan
Harlingen, Texas

Source: BIDC Texas Exports Database Massachusetts Institute for Social and Economic Research (MISER)

Industrial Development

The strength of Harlingen's local economy lies in its ability to attract new industry and thus create new jobs. The Harlingen Chamber of Commerce is contracted by the City of Harlingen to do economic development through the use of the City's half-cent economic development sales tax. Harlingen voters adopted the '4A' taxing designation in 1990. A '4A' designation allows the creation of a municipal Development Corporation to manage the funds collected under the taxing designation. The funds are used primarily to facilitate manufacturing and industrial activity. These monies can be used to provide incentives to attract businesses (such as low cost land, lease assistance, etc.), fund targeted infrastructure related to a project, provide job training related to specific companies, and retain or create new jobs. The amount of money collected annually has risen steadily since the adoption of the taxing mechanism (see Figure 11-2). The Development Corporation is a five member group appointed by the City Commission to recommend projects and money (incentive) allocations to the City Commission for approval. There is also a seventeen member Harlingen Industrial Foundation Inc. (HIFI) whose job is to locate and acquire land for economic development.The designation of '4A' has fit well with the concept adopted by the Chamber of Commerce in their strategic economic plan developed by the Austin-based Angelou Economic Advisors Inc. in 1997. This strategic plan entitled Harlingen: A shared Vision for the Rio Grande Valley suggests a 'cluster approach' to economic development. That method involves recruiting companies that share similar characteristics that allow them to complement each other. The report suggested three clusters for Harlingen to emphasize based on existing development and area trends. Those three clusters are manufacturing, logistics and health care.

Since 1997 almost two dozen manufacturing companies, four telemarketing firms and two major logistics and distribution centers have moved into the Harlingen Industrial Park, Harlingen city limits or one of the two Harlingen Enterprise Zone.

Retail and Construction Trends

Two other important economic indicators are retail trade and new construction. Both have had positive increasing trends in Harlingen in the last decade. According to the State Comptroller of Public Accounts retail trade has nearly doubled for the City of Harlingen within that time period. Retail trade in 1990 was reported at $455 million in 1990 and reaching $812 million in the year 2000 (see Figure 11-3).

Building construction permits for residential construction have also inclined overall in the same ten year period with the value of annual permits received growing by 140% from nearly 10 million in 1990 to nearly $24 million in 2000 (see Figure 11-4).

Commercial construction tends to be more volatile and therefore not as good an economic indicator because one or two large projects can skew the annual permit values. The past ten years have not shown a definite trend in a direction, but a steady healthy large dollar investment is evident in each year that indicates a willingness of individual developers to make substantial capital outlay in the Harlingen economy (see Figure 11-5).

Economic comparisons to other cities in the Valley are beyond the scope of this chapter due to outside influences that affect the larger border cities of the region. Those comparisons are better drawn from studies compiled by economic advisors and available at the Harlingen Chamber of Commerce.

Goals & Objectives

Goal 11.1      Improve Communication and Cooperation between City of Harlingen development departments and Chamber of Commerce staff.

Goal 11.2      Seek ways to coordinate with neighboring San Benito and Cameron County building depts. to report development numbers that will attract developers' attention.

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