MCALLEN, A site selector from Portland, Oregon, has shared his initial thoughts on the McAllen-Reynosa area.
Richard ‘Dick’ Sheehy is a director with CH2M who has had 30 years in the site selector business, focusing mostly on technology and manufacturing. He had never visited the Rio Grande Valley before and came at the invitation of McAllen Economic Development Corporation.
Rather than hold a regular monthly meeting in March, MEDC President Keith Patridge asked his board of directors to attend the McAllen Convention Center for a breakfast event with Sheehy.
“I have never been south of San Antonio before. It has been nice to see what is different about where you are. Obviously, it is a nice place,” Sheehy said, referring to the 90-degree weather. Back home it is 45 degrees. “My wife is quite jealous,” he joked.
Sheehy said for the first ten years of his career the focus was on recruiting manufacturing firms to the United States, noting the “wave” of Japanese companies that arrived on the West Coast in the 1990. For the next ten years, Sheehy specialized taking companies offshore, particularly to China and India. He said he was involved in 30-plus master planned developments in China. For the last five-pus years, Sheehy has been involved in “re-shoring,” or bringing U.S. companies back stateside.
Sheehy pointed out that CH2M was purchased by Jacobs in December. As CH2M had a workforce of 20,000, and Jacobs had one of 50,000, the combined strength is now 70,000. “Our business is design high technology facilities. Our forte is to design very complicated buildings that are very expensive, and build very complicated things. That is what we are good at,” Sheehy said.
Sheehy pointed out that none of his clients have ever asked him to look at the Valley as a place to locate.
Towards the end of Sheehy’s hour-long presentation, Patridge asked:
“After a day and a half here, give us your impression of our community. If you were writing a report to one of your clients, what would you say about our area?”
“That it is a good size with room to grow. It is a manufacturing area, although the dynamic across the river is still something I need to understand a little bit more. But, I think I am getting up to it. That technology-type companies, high investment, lower jobs, that are not job-wage dependent will be on this side, wage dependent will be on the other side. That tends to be good,” Sheehy said.
“You have got more international companies here than I ever expected. That is a very good thing. It means something to me and it means something to my clients.”
Sheehy then addressed gang violence in Reynosa.
“I think, regarding the international crossings and the threats, is something that you are more aware of here than we are away (from here). But, I need more explanation on that. What does that really mean to a company that is on this side of the river? What does it mean to a company on that side of the river? And what does it mean to the managers who live here but work over there? Is it really an issue or is it a perception? If it is really an issue, what are the solutions? Are there solutions? I would need more information.”
Sheehy said he found it interesting that land is cheaper in McAllen than most of the places he has worked with in the United States. “It is inexpensive property, from what I have heard so far. It is not a huge deal but for a big site, it is a big deal.”
Sheehy was also impressed with the water and wastewater rates.
“You have some of the cheapest water and wastewater rates in the country. That is huge. It is millions of dollars to my clients. To have the water and it is cheap, that is a good deal because a lot of communities that are growing do not have the water. If you want water it is so expensive it is almost prohibitive,” Sheehy said.
“It sounds like an incentive you have with no connection fees. Plus cheap water, at probably one third of the average in the United States. It all adds up.”
Sheehy added: “I have had a very good time learning about the region.”
During his presentation, Sheehy said the work of a site selector has changed over the years. “It used to be we had to accumulate all this data and process it. Now, companies usually come to us and say, this is where we are going to look, come help us.”
The site selector asked MEDC board members to ask a question at any time during his presentation. Patridge did. He asked what percentage of Sheehy’s clients already know where they want to go. Sheehy said about 50 percent.
“Half of them have done their homework. With a foreign company, we rarely get asked, where should we go in the United States. Samsung went to Austin. We had 53 proposals, 53 locations around the United States, that is not happening much anymore. They usually have an existing presence and they want to expand, but not too far away.”
Patridge asked what is deemed a key question for economic development leaders in the Valley: what comes first, an educated workforce, which attracts business, or business, which then requires a workforce to get up to speed.
Sheehy responded: “You really need to build that perception that you do have a technology workforce here, by focusing on the companies that are here. And focus on the companies that are across the river. There are technology companies manufacturing things over there (in Reynosa) today. I had no idea that was happening. And it is big. That is a very unique circumstance that a lot of people probably do not know about. Promote this as a manufacturing region. Some other people might want to come. With automation, there should to be more coming to your side of the river.”
Asked about the importance of offering incentives to lure a company to a region, Sheehy said: “It is just as important to have a targeted incentive that is very clear. If you want those targeted jobs that have a multiplier of six to one, and you incentivize that, that tells me what you want and where you guys want to go.”
Sheehy gave the example of Oklahoma which gave incentives to get semi-conductors plants ten or 15 years ago. “They changed their property tax abatement law to be, for the first three years, to 100 percent. And they changed their evaluation of semi-conductor equipment. Year one, 60 percent, and later it dropped to ten (percent) over five years. That was an example of a state that wanted to change their perception and what they looked like to industry, by doing something very aggressive. They learned that from the other states that were already successful.”
Sheehy acknowledged he has a built-in bias towards manufacturing. “If you invest tens of millions of dollars in a building and put all the equipment in, it is a hell of a lot harder to leave than if you are renting some office space.”
Asked how important quality of life issues are to companies thinking of moving to a region, Sheehy said:
“It is not first. It is a tie-breaker when you get on to the shortlist. However, I think it is going to become more important because of the worker shortage. Dirt and money drives it, and then if you can recruit and have a good quality of life, that is the whole package.”
Sheehy’s company has just been taken over by Dallas-based Jacobs so he is learning more about Texas. “Don’t get me wrong, Texas, for the right project, you guys can do a lot of stuff. It is knowing about your track record, that speaks a lot,” he said.
Asked how big a metro area has to be to land a good-size manufacturing plant, Sheehy said: “I knew very little about McAllen before I came. I did some quick research. From a manufacturing standpoint, my advice is, you need 750,000 to a million (people) in a metro area to have enough to be successful. That is my personal benchmark for my type of clients. That is a good number. You get into the big cities and that is a bad number because these types of clients do not want to go to the big cities. Too much cost. I did not know the numbers (of McAllen) before I came. Once I looked at it I was surprised. Then, I got a little bit more information about Reynosa and I was really surprised. I did not know about that. That is really important. You are the right size.”
Chad Wootton of Texas A&M University asked Sheehy about the importance of an educated workforce.
“There are no benchmarks. There has to be a certain amount of technology-savvy folks. All of them will need the technical training on an ongoing basis. It is important upfront but it is more important ongoing,” he said.
With regard to workers with a doctorate or a master’s, Sheehy said: “There has got to be enough critical mass or the ability to bring them in. If a company wants to go somewhere they can jump over a bunch of hurdles. If they do not want to come, they can put those hurdles up and use them as excuses.”
Asked if communities aggressively pitch themselves to him, ahead of a client even showing interest in that region, Sheehy said:
“They do. I will go to a conference once or twice a year. I get visited four or five times a year in my office in Portland. I never have enough sites. I always like to see what people have to offer.”
After the Q&A with Sheehy ended, MEDC’s Patridge gave some wrap-up remarks. He noted a “strength” Sheehy had observed, that the Valley is in the middle of Mexico City and Dallas.
“It seems as though we have to pick what our focus is. We have some work to do to get our name out there. I think we have got a branding issue,” Patridge said. “I had not really thought about the fact that we are central to Mexico City and Dallas. We will have to give some thought to that as to what the value is but it sounds like there is one.”
Interviewed about the Sheehy visit later by the Rio Grande Guardian, Patridge said:
“The whole purpose of bringing him down was two-fold. One was to get an idea of what a company expects from a community in which they are interested in putting a location. The second was to get a site selector who represents high-tech companies who had never been south of San Antonio before. He did not know what we had but he was very pleasantly surprised.
“Also, we wanted to give my board an idea of what site selectors look for and to show him what our community has. I think it was very successful. We took a guy who had never been here before and when he left he said, you really have a good story to tell. It is just a question of how you tell it.
“He made the point, we are not located on the border, we are located half way between Mexico City and Dallas. The reason he said that, in further discussions, was that he was looking at the negative connotations of the border but as we started looking at that… look, all of our advantages hinge on the border location. I understand we have a problem we have to deal with, or, rather, I would say, a reputation we have to deal with, but, you cannot hide the reputation when it is the reason you exist, the border.
“We have to figure out a way of addressing the negatives of our location. I was extremely pleased with having him come down. This is the second because, working with RSTEC (Rio South Texas Economic Council) we were able to bring in the German consultants, which also was an excellent visit. So, we are beginning to get on the radar of the site selectors companies hire to help them choose a location. I think it went really, really well and I think we accomplished what we wanted to accomplish.”