The country's hottest new growth belt is called the Texas Triangle, and Austin is the smart little city at its center.
Late last April, when only 4 of the original 57 cities bidding to become the new home of Microelectronics and Computer Technology Corp. remained in the running for that coveted prize members of MCC's site-selection team made their first visit to Austin, Tex. Few of them had ever set foot in this quaint little capital city of 350,000; few, indeed, had been any closer to it than the Dallas -- Fort Worth airport. Nobody following the campaign was quite sure what picture of Texas had lodged in the visitors minds, but as one local official later commented, "We assumed that all Texas meant to them was cowboys and cactus, and we didn't think an image like that would have the best minds in America beating down cur doors to get in."
As the MCC team began their rounds (San Diego; Atlanta; and Raleigh-Durham N.C. were also on their final itinerary) there was intense speculation across the country as to which factors would determine their choice of an urban base. Of the two issues most often cited by MCC people themselves -- academic strength in the computer sciences and a high "quality of life" index -- the one of general livability was the hardest to pin down, for that could be interpreted to mean anything from the reputation of the area's symphony orchestra to the cost of new housing to the friendliness of the folks next door.
Although some elements -- the amount of annual rainfall, say, or the number of first-run movie theaters within a 10-mile radius -- could be reduced to statistical fact sheets, others clearly could not. Quality of life, after all, like beauty, lies mainly in the eye of the beholder, and when the beholder happens to be a new high-technology company being funded at a rate of $75 million a year with very particular needs to fill and very little time in which to fill them, first impressions, sketchy as they are, can count for a lot.
If the men from MCC knew little about Austin, Austin knew plenty about MCC. As one of three Texas cities (with Dallas and San Antonio) actively courting the high-tech consortium, Austin had marshaled a blue-ribbon panel to lobby on its behalf. This group, which included Texas governor Mark White, Dallas businessman H. Ross Perot, Austin developer John Watson, and San Antonio mayor Henry Cisneros, had studied the MCC charter carefully and had an excellent grasp of what it would take to meet the company's requirements. Cisneros was particularly impressive. Although San Antonio had becn ruled out by MCC because of its lack of a major academic center, Cisneros had worked vigorously and imaginatively on Austin's behalf, and it is he who is credited with coining the term "Texas Triangle" to describe the fertile business belt bordered by Dallas to the north, Houston to the southeast, and San Antonio to the south, with Austin in the center. More than anyone else, he epitomized the team spirit Texans counted on to prevail.
Beyond the specifics, however, Austin understood that a unique opportunity was at hand. By attracting a pure research firm such as the one Control Data Corp. chairman and chief executive officer William C. Norris was putting together, it could engineer the kind of coup that a city -- even an entire state -- could build its economic future around. Headed by Admiral Bobby Inman, former chief of naval intelligence and onetime deputy director of the Central Intelligence Agency, MCC was expected to pioneer the race by the companies of America's private sector to develop and market fifth-generation computer technology before Japan and other global competitors could beat them to it. Publicity value aside, the long-term benefits of luring such an enterprise looked enormous. At the least, dozens of applied-research and manufacturing facilities were sure to spring up around it. With everyone from international economists to state development experts championing the need to move away from a decaying industrial base and into a new economy, here was one of the surefire launching pads to the marketplaces of the twenty-first century. Only 1 city in 57 would have that in its own backyard, and Austin, a rather fussy place when it comes to soliciting industrial newcomers, wanted it very, very badly.
The team from MCC was met at Austin's municipal airport and whisked away to a waiting helicopter. Without further ado, they took off and began banking low over the heart of the Texas hill country. Below, the cool blue vein of the Colorado River coiled downward from Lake Austin through Zilker Park and into Town Lake, on the city's southern rim. Other parks dotted the urban perimeter. Dominating a downtown landscape rich in historical buildings (many dating back to the mid-1800s) was the pale pink granite of the capitol itself, just a few blocks south of the University of Texas and its own sprawling vista. Further to the east and north, they could see the modern plants of Motorola, Tracor, IBM, and Texas Instruments, the latter two nestled alongside UT's Balcones Research Center, where 20 acres of prime, undeveloped real estate awaited MCC's approving nod. The men from MCC fingered their thick briefing books and stared down at all the greenery. What they did not see was almost as impressive as what they did see. They saw no belching smokestacks, no clotted freeways, and no signs of what Inman wryly referred to as "Levittown sprawl." There was nary a cowboy nor a cactus in sight. For a first impression, it was a memorable one. When that helicopter touched back down to earth, the battle had not just been joined. It was damn near over.
Three weeks later those not dumbfounded by MCC's announcement that it was going to Austin were publicly outraged. "I gather Texas bought it " grumbled Atlanta's mayor, Andrew Young, referring to the generous package of incentives found inside the winning envelope. Among those perquisites: free rent at the Balcones Research Center site, over $20 million in low-cost mortgages and $3 million in bridge loans for incoming MCC personnel, another $20 million in commitments by UT and Texas A&M to beef up their departments of computer science and electrical engineering, and the complimentary use of a Lear jet. Young also wondered aloud why any sane engineer would possibly want to live in a backwater burg like Austin when he could settle in cosmopolitan Atlanta instead.
Sour grapes notwithstanding, Young and other critics had a point. No other city or state had come close to matching Texas's financial outlay, and few other university systems could have hoped to. Thanks to a Permanent University Fund earning about $15 million a month in oil-and-gas royalties, UT, already considered close to the likes of Massachusetts Institute of Technology and Stanford University in research capability, was able to promise MCC not only the new programs it was looking for tomorrow, but also the cash to fund those programs today. For its part, MCC confessed it was more excited at the prospect of helping steer a nearly great research institution toward true greatness than of "taking a seat on the back of the bus," as they phrased it, with a more established academic leader. By choosing to go to Austin, MCC had made that prospect a virtual certainty.
In other ways, though, the whole flap about money was patently misleading. For one thing, it disregarded the fact that UT was investing all those millions in itself, not MCC, and that virtually all the rest of the committed funds were coming from private sources, not state coffers. For another, it ignored precisely those quality-of-life considerations that MCC deemed paramount and Austin offered in abundance. (A survey of residents' perceptions of their own cities taken by the Texas team during the final weeks of the campaign showed that Austin ranked first among its competitors in 6 out of 16 life-quality categories and last in only 1 -- climate. Atlanta finished first in 3, last in a league-leading 8.) And for a third -- well, as Inman himself put it, "The real message [in Austin winning] is that if you want to compete on this level, you have to understand the needs of the entity you're trying to attract with great care and in great detail. Austin was clever, that's all."
Austin is a city in rapid flux. One has only to spot the new office towers rising downtown or drive by the housing developments multiplying around the city to see physical evidence of this dizzying change. But it is not just physical change that underscores where Austin has been and where it is going. Veterans of the city's counterculture -- and there are many in this maverick town -- saw the handwriting on the wall a few years ago when the Armadillo World Headquarters, a famous and free-spirited rock-music hall that borrowed its name from Austin's beloved armor-plated mascot, was torn down to make way for a 7.5-acre office complex across the street from a new Hyatt hotel. They asked -- tongue only slightly in cheek -- that the new inn be christened the Hyatt Armadilo. The hotel people demurred. In such minor matters can one discern the larger forces at war for this city's soul.
"Businesspeople have had to be more tolerant of alternative lifestyles around here than they might be in other cities," says Neal Spelce, publisher of an economic newsletter and former president of the Austin Chamber of Commerce. "Austin's known for its college-type atmosphere, and there's always been an infiltration of student politics into local government, which has made things interesting. But the brains of its university have also been its best resource. There's an old saying around here that if you want to stop growth in Austin, move the university to Amarillo."
Growth has not stopped, but it has often been tested, sometimes severely. Because it is both a state-university and a legislative town, Austin's public-sector foundation has insulated it from most recessionary and developmental woes. Its unemployment rate (3.8% as of last June) consistently ranks among the lowest in the nation, and its tax burden, with no state personal or corporate income tax, is light. But it is also a city that has vigorously plotted its own destiny.
Ten years ago, due to the involvement of scores of citizens' groups, the city council adopted Austin Tomorrow, a farsighted master plan calling for controlled growth along the north-south corridor and away from more environmentally fragile areas to the west of the city. Some of these control measures led in turn to the city acquiring a reputation, which many feel is undeserved, for economic xenophobia. For whatever reason, several large companies interested in expanding into Austin gave up and went home, feeling either underappreciated or overburdened by municipal red tape. The one example everyone still cites is Michelin Tire Corp., which backed out of plans to build a major Austin facility when a group raised concerns about the impact on their neighborhood. That kind of hassle also kept a lot of Houston and Dallas money away.
"In the past," says RepublicBank Austin chairman Ben T. Head, "this attitude that you could build walls around the city hurt us; the idea that if you didn't finance any new sewers, everyone would stay out. Well, they haven 't stayed out, but we have put a strain on our existing resources."
Roger Duncan, a city council member long identified with the rabid "no growth" movement, sees matters somewhat differently. "We've insisted on having only clean industries come in here. If that means some firms have read over our ordinances and stayed away, fine. Look, I wanted MCC in here as much as anyone, but I doubt MCC would have wanted us that much if we hadn't been following these policies all along."
In truth, MCC is only the latest in a handsome line of recent arrivals. Between 1965 and 1983, Austin's manufacturing sector grew from 5,000 to 35,000 jobs, and lately the exodus from Silicon Valley to the heart of the Triangle has taken on Gold Rush dimensions. Motorola Inc. and Lockheed Corp. are here in force, as are Tandem Computers, Advanced Micro Devices, Rolm, and Intel. IBM Corp., with over 5,500 workers, is the largest private employer in town. Moreover, Austin has become what company managers refer to as a trapdoor town: Many executives slated for relocation would rather quit and take their chances in the open market than move families and careers elsewhere.
Historically, the situation for smaller companies has been less clear cut. Thirty years ago, according to Spelce, the best entrepreneurial minds coming out of UT "couldn't wait to get out of here" to seek their fortunes. He dates the turnaround to the mid-1960s, when Tracor Inc. (a giant engineering firm spun off by UT scientists) was solidly established, IBM was coming in, and the national economy was booming. "But we've never been financial center," Spelce notes, "and you need money for start-ups." Mayor Ron Mullen concurs. "The only thing we haven't done well here is attract venture capital. But that's changing fast." Why? "Maybe," he says with a grin, "because others have been reading all that propaganda about us in the national media.
Whatever they have been reading has had its effect. Last year alone, 10,000 new jobs were created in Austin. The highly publicized MCC campaign can only accelerate that trend. Pike Powers, Governor White's executive assistant, echoes the Texas Triangle theme by saying, "Look, if you're a Control Data and you re doing pure research here [with MCC], plus you're heavily committed in San Antonio, isn't it logical you'll want to put other facilities around this Triangle? And won't service businesses follow? In that sense, Austin's economic future is now wedded to Houston's and Dallas's, and that's a big advantage. Texans have always felt an entrepreneurial kinship with each other. We're one of the last frontiers."
Some fear that, like California or Houston, this new frontier will eventually choke on its own success, driving housing costs through the roof and rush-hour commuters to despair. History, however, suggests otherwise. "We'll never become Houstonized," vows one UT official. "Austin is too smart and its politics are too volatile. We're about one-third liberal, one-third conservative, and one-third persuadable. I'd be amazed if we even started to become another Santa Clara County."
Others would be even more amazed if the next announced move of a growing technology company into Austin provoked cries of astonishment. After all, as John Watson says, "I like to think that up until the MCC campaign, Austin was the best kept little secret in the country. Now I'm afraid the secret is out."