ELECTRONICS: GROWTH ON THE SILICON PRAIRIE

Over the past several years, Dallas/Fort Worth’s electronic industry has grown to rival that of the area south of San Francisco known as Silicon Valley. In fact, North Texas is beginning to be known as Silicon Prairie. The entire electronics product spectrum is represented here. Semiconductors: Mostek, Hitachi, and Texas Instruments. Computers: Tandy Corp., Harris Corp., and Computer Automation. Military electronics: E-Systems, General Dynamics, Rockwell-Collins, and Varo Inc. Telecommunications: Dan-ray, Carterfone, and Action. Specialized high-technology products: Docutel Corp., Recognition Equipment Inc., and Xerox.

The electronics manufacturing industry is the number one employer among manufacturers in Dallas and Fort Worth, with 50,000 people on the payroll, up from 35,000 just four years ago. The two cities account for half the electronics employment in the state of Texas.

There are already two billion-dollar electronics companies in North Texas. Texas Instruments has revenues of $2.5 billion, and predicts $10 billion by the end of the 1980’s. Tandy Corp. passed the billion-dollar mark last year, and with its marketing muscle (particularly in the low-end business computer market) is expected to hit $2 billion by 1985. And there are more giants on the way. Mostek, with current revenues of $134 million, aims to hit a billion by the mid-Eighties.

In Dallas / Fort Worth, big electronics companies begat small electronics companies: The presence of Texas Instruments ensured a large pool of engineering talent to help venture capitalists spend their money on high-technology projects in the late Sixties and early Seventies.

Many of these new electronics enterprises, unable to find enough cash to grow with their markets, have become willing partners in mergers with large corporations. Danray is now a division of the Telecom. Carterfone is a part of Northern Cable & Wireless Ltd. of London. Action Corp. was bought by Plantronics Inc.; Spectronics, an electro-optical firm, was Plantronics Inc.; Spectronics was acquired by Honeywell. Micro Display Systems was purchased by Commodore, and Teccor Electronics by Ranco Inc. And as the larger corporations commit money and manpower to their North Texas acquisitions, they are adding to the talent pool that will keep new ventures coming.

The high concentration of engineering expertise here also helps account for the immigration by established companies. Xerox Office Systems opened a facility in the area in 1973, employing 550 persons; today, 1400 are involved in engineering, assembly, and marketing of word-processing and facsimile office equipment.

The highly competitive Japanese are moving in, too. Last summer, Nippon Electric Co. of America opened its first U.S. manufacturing plant, making telephones and private branch exchanges (PBX’s) in the Las Colinas industrial park in Irving. This spring, Hitachi Semiconductor of America Inc. opened its first American manufacturing facility here for semiconductor memory circuits.

There may be limits to the growth of the electronics industry in North Texas, but they are nowhere in sight. The world market for electronics is expected to grow at 11.5 to 13.5 percent per year through the 1980’s, with Dallas firms likely to equal or exceed that growth, according to Mark Shepherd Jr., Texas Instruments’ chairman and chief executive officer. “And we are just seeing the trend beginning,” claims Richard Hanschen, a former TI employee and a venture industrialist who played a key financial role in the creation of Mostek. “[Prices of] computer technology are dropping at an annual average rate of 15 percent. Inflation is moving at 10 percent. Computer technology is so cost-effective that we are seeing an explosive use of electronics to increase productivity. We’ve got a whole decade to go before we can even think of peaking.”

Comments