San Antonio Express-News (Sunday)
S.A. picks up speed in auto industry
Success of Toyota is helping fuel manufacturing sector
For years, San Antonio city leaders had tried and failed.
Throughout the 1980s and 1990s, they wanted to bring an automotive plant to the region — the gold standard in economic development, a win that could generate thousands of jobs and boost tax revenue.
But it wasn’t working. Automotive supply lines at the time were centered around Detroit and other parts of the Midwest, not South Texas. Automakers such as Saturn, Mercedes-Benz and Hyundai all rebuffed San Antonio’s recruitment pitches. And then Toyota came along. In early 2003, the Japanese automaker announced it would build a pickup factory in San Antonio, a decision that capped off six “frantic, exhilarating” months of negotiations, as Bexar County Judge Nelson Wolff described them in his 2008 book “Transforming San Antonio.” Local and state officials put together a package of subsidies worth more than $100 million to attract Toyota to the South Side.
Toyota’s factory, which cost about $2 billion to build and began producing full-size Tundras in 2006, effectively launched the auto industry in the region. And its growth has exploded in recent years.
“What Toyota does is demonstrate that this is, in fact, a viable location for an automotive plant,” said David Marquez, director of community and economic development for Bexar County. “It fits our community.”
Manufacturing employment in San Antonio topped 52,000 last fall, its highest level in more than 20 years, according to the Bureau of Labor Statistics. Across Texas, the number of people working in factories today — just over 900,000 — is slightly lower than it was in 2002.
Within the manufacturing industry — which includes producers of everything from satellites to fast-food fryers — automakers and their suppliers are rising fast. Employment in auto manufacturing has more than doubled over the last two decades, a sign of the statewide shift toward vehicle production.
You can see their ascendancy in San Antonio.
The commercial truck and bus manufacturer Navistar International in March unveiled its recently completed, hightech truck factory on the far South side, where it will soon pump out diesel and heavyduty electric trucks.
Tesla suppliers, such as ElringKlinger AG and Saueressig, are setting up production facilities in San Antonio to ship parts to Tesla’s new $1.1 billion Gigafactory just outside Austin, where the company currently makes its Model Y sedan. (The only other major vehicle manufacturing plant in Texas is General
Motors’ facility near Dallas.)
Transmission maker Aisin AW completed work on a $400 million plant in Cibolo last fall, and heavy-equipment manufacturer Caterpillar builds engines at a plant in Seguin.
Toyota itself also recently completed a $400 million expansion of its plant, where it soon will produce the Sequoia SUV alongside the Tundra pickup.
Meanwhile, San Antonio’s automotive industry is beginning to push beyond production into higher-skill, higher-paying engineering.
The reconstituted DeLorean Motor Co. is setting up its headquarters with plans to hire 400 employees, many of them engineers. They’ll work on the new electric DeLorean model and technologies that the company may incorporate in the vehicle, such as hydrogen fuel cells. DeLorean will produce the car in Canada.
Navistar set up an engineering center 8 miles from its
South Side factory to test and validate parts for its electric trucks.
The shift to automotive research and development could make San Antonio a hub for high-wage jobs in zero-carbon transportation in the years ahead, city officials say. DeLorean said its San Antonio employees will earn, on average, about $140,000 annually.
“The long-term play is to get
more of the value-added work. So when you see Navistar coming here, they didn’t just bring a truck factory, they brought their engineering plant,” Marquez said. “That’s what our county strategy has been from the beginning.”
Nearly two decades ago, Toyota was interested in San Antonio’s workforce and cheap electricity when it was considering sites for a plant. Also, the Tundra had a lot of sales potential in Texas, so Toyota’s marketing department thought it would be smart to build the trucks in the country’s largest pickup market.
But a longtime personal friendship was also a big factor in the world’s largest automaker’s decision to build a plant in San Antonio.
The Toyota multiplier
Then-Mayor Henry Cisneros led the city’s first trade delegation to Japan in 1985, where he befriended Naoko Shirane, a relative of Toyota’s founding family. The city hired her and her husband to promote San Antonio to corporations in Japan.
Over the years, Shirane helped set up meetings between Cisneros and Toyota officials, and facilitated informal communications between them — contacts that proved invaluable when the company began scouting locations for a U.S. Tundra plant.
Shirane died in 2013.
Over time, Cisneros cultivated a friendship with Shoichiro Toyoda, the former chairman of Toyota and son of its founder.
“There should be no question that the reason we got on the list and prevailed was because of Cisneros’ relationship to Dr. Toyoda,” Marquez said.
When Toyota announced its decision to build the plant in San Antonio, the manufacturing industry in the region was in free fall. Companies were outsourcing jobs as product imports surged, clobbering the makers of more expensive domestic goods.
Manufacturing jobs peaked in San Antonio at 57,000 workers in 2000. But over the next three years, factory owners slashed nearly 20 percent of their workforce, eliminating more than 11,000 jobs.
The Toyota plant began turning around those dismal numbers when it opened the plant in 2006.
“There’s always been manufacturing here but I don’t think San Antonio had been known as a manufacturing hub until bringing a big name like Toyota,” said Leslie Cantu, a vice president at Toyotetsu Texas, which supplies brake pedals and fender aprons to Toyota’s factory.
Parts makers have delivered some of the biggest jobs gains.
Marquez’s first task when he took over the county’s economic development department in 2005 was to establish a supplier park, located next to the automaker’s plant, for Toyota vendors. The close proximity would cut down logistics costs.
Today, 23 on-site manufacturers supply parts to Toyota — everything from car seats to hood locks. Toyota’s factory employs about 3,000, and its suppliers employ another 4,000 workers.
“There’s a lot of benefits to the way Toyota set up this campus,” Cantu said. “Reducing inventory, there’s an impact on reducing costs so that we can be more competitive.”
Toyotetsu supplies other Toyota factories, but Toyota’s San Antonio operation was the first one where Toyotetsu opened a factory next door.
“At some of the other plants, you get your volume forecast and you’re just producing and shipping,” Cantu said.
As Toyota developed the supplier park, the company asked Cisneros for a list of wealthy Hispanic business people in the city with the cash and the willingness to become partners in Toyota’s parts suppliers.
Toyota wanted to diversify its supplier base and mirror the city’s demographics. The company chose four men to lead