The Texas economy is one of the most robust in the world. Wildly profitable companies and ingenious entrepreneurs call this state home, and what happens here influences businesses around the nation. Here’s a slice of the profits, losses, big deals, and backroom decisions happening across Tex
NASA is one of many agencies drawing ever closer to the edge of the fiscal cliff, and it may be in store for major financial setbacks if the slate of federal budget cuts takes effect as scheduled on January 2. The Aerospace Industries Association released a report this week projecting that more than 5,600 scientists, engineers and technicians at the Johnson Space Center in Houston could lose their jobs as a result of the 8.2 percent reduction in NASA’s budget. The cutbacks “would have a direct impact of more than $320 million” in Texas, according to the Houston Business Journal.
The Bottom Line: According to the study, Houston would be the city most affected by the sequestration cuts, which could put more than 20,500 jobs in jeopardy nationwide. Because “the NASA Authorization Act of 2010 prohibits any cuts to the civil servant work force through fiscal 2013,” all layoffs would come from the private sector, the AIA says.
Pharmaceutical giant Pfizer Inc. will pay out $43 million to settle a lawsuit spearheaded by Texas Attorney General Greg Abbott. The suit accuses the company of marketing prescription drugs for uses not approved by the FDA, including “making unsubstantiated claims that its antibiotic Zyvox is superior to the powerful generic drug vancomycin,” Consumerist reports.
Additionally, the suit alleges, Pfizer reps improperly marketed its drug Lyrica—originally approved as a treatment for diabetes-related nerve damage—as a treatment for chronic pain and other conditions.
The Bottom Line: $3.9 million of the settlement will go to Texas, and the remainder will be shared among the 32 other states that joined in the suit. The decision also requires Pfizer to improve training of its sales force to emphasize FDA rules against marketing drugs for off-label uses.
Get Rich or Dine Trying
Texas’s rapid population growth and strong economy have contributed to a boom in the state’s restaurant industry, and a new report predicts that trend will continue in 2013. According to the Houston Business Journal, “the National Restaurant Association’s 2013 Restaurant Industry Forecast projects Texas will be the leading state for sales growth in the sector next year.”
The group expects restaurant sales to climb to $40.8 billion next year, a 5 percent increase from last year’s total. If that estimate holds true, it will be the industry’s fourth straight year of sales growth, the Houston Business Journal reports.
The Bottom Line: Texas restaurants currently employ more than 1 million people—about 10 percent of the statewide workforce, according to the Texas Restaurant Association—and analysts predict that total could reach 1.25 million within 10 years.
Winner of the Week: Eagle Ford Shale
The Eagle Ford shale, a region spanning from southwest Texas to north of Houston, has been a hotbed for oil and gas drilling in recent years, and investments are expected to continue to pour in next year. A new analysis by energy consulting firm Wood Mackenzie forecasts nearly $30 billion in capital expenditures in the area in 2013, led by companies including ConocoPhillips, EOG Resources and BHP Billiton. The Houston Chronicle‘s FuelFix reports that an investment of that size would account for “more than one of every four dollars in capital expenditures spent for oil exploration onshore in the United States outside of Alaska.”
Meanwhile, San Antonio-based NuStar Energy LP is spending more than $100 million to expand its oil pipeline network in Eagle Ford, and this week the company signed an agreement with ConocoPhillips to transport its oil to Corpus Christi, according to the San Antonio Business Journal.
Loser of the Week: Office Depot
An investigation by Houston city auditors has turned up evidence that Office Depot may have overcharged the city between $1.7 million and $6.6 million between 2006 and 2010, the Houston Chronicle reports. The city paid the retailer more than $19 million for office supplies over the course of the four-year contract, but officials decided to review that figure following the discovery of overcharges in Dallas County and San Francisco.
Auditors found that Office Depot failed to apply several discounts outlined in the contract, and many products were “either not on a price list, or present on two separate price lists,” according to the Chronicle. The company has settled several lawsuits over similar allegations in other states since 2009.