Texas continues growth into auto powerhouse

Toyota, GM ramp up their operations in the Lone Star State

Like the state’s burgeoning auto industry, the Toyota Motor Manufacturing plant in San Antonio has come a long way in the nearly 10 years since its first Tundra truck rolled off the line.

The plant came to Texas when the state’s major auto industry operations were mostly limited to a General Motors plant in Arlington. That’s since changed dramatically.

In addition to growth at its San Antonio plant, Toyota is now centralizing its North American headquarters and other operations in Plano. The news came on the heels of a GM announcement last year it would infuse its Arlington plant with a $1.4 billion expansion.

Put it all together, economics experts say, and Texas is becoming a key player in the auto industry.

“During what has been a very challenging period overall for the auto industry, Texas has fared pretty well,” said Austin economist Brian Kelsey, founder and principal at economic research firm Civic Analytics. “The industry’s future here appears to be bright.”

Forecast: ‘More on the way’

The state’s manufacturing sector is seeing a nice bump from the growth of Texas auto industry operations as the tally of related executive jobs grow, experts say.

Austin economist Angelos Angelou, who says the Toyota plant’s economic impact has been “phenomenal,” estimates that the automaker’s manufacturing facility and its new Texas headquarters could generate more than $3 billion to $4 billion in personal income totals for the state.

Angelou predicts more job growth in the North Texas area such as the Dallas-Forth Worth metroplex or somewhere along the Interstate 35 corridor between North and Central Texas.

At this rate, “I think the state could possibly attract another (auto) manufacturer,” said Angelou, founder and principal executive officer of Angelou Economics. “It will be more on the way, I would say.”

Texas currently has about 38,000 jobs in motor vehicles and parts manufacturing, Kelsey said. That ranks seventh among all states for such jobs, up from 10th in 2003, Kelsey said.

As of 2014, the auto industry added an estimated $4.8 billion to state gross domestic product, he said. While that figure is dwarfed by larger sectors such as energy, it is becoming an increasingly viable source for jobs.

“It’s a relatively small, but growing, segment of the Texas economy,” Kelsey says.

‘Savior of the industry’

Only two Southern states have fared better in adding jobs in the sector since 2003.

“We’re still a relatively small player in the market compared to the industrial Midwest, but, among Southern states, only Tennessee and Alabama have added more jobs than Texas in motor vehicles and parts manufacturing since the Toyota announcement in 2003,” Kelsey said.

In terms of states with a larger share of auto industry jobs, only Alabama has seen a faster job growth rate than Texas, he said.

Since 2003, “only Alabama has grown faster” than Texas in terms of states with at least 25,000 such jobs, Kelsey said.

By next year, Toyota could bring the combined number of Texas workers at its San Antonio plant and workers for its new North American headquarters in Plano to more than 11,000.

Of that, the Toyota Texas plant has about 7,000 workers, which includes 3,200 direct Toyota employees. The rest are employees who work for 23 on-site suppliers located on the campus, said Mario Lozoya, Toyota director of government relations and external affairs.

“Texas sells a lot of trucks, so it was the right decision to build trucks in Texas,” Lozoya said reflecting on the plan during a recent media tour of the plant.

Angelou estimates Toyota has created as many as 15,000 to 20,000 direct and indirect jobs jobs in Texas.

“They have basically solidified Texas as an auto-producing state,” he said. “Toyota has been a savior of the auto industry in Texas and single-handedly transformed the state as a place for auto manufacturing.”