McALLEN, RGV – A company that makes parts for the automotive industry is moving into the area, bringing 1,500 new manufacturing and distributions jobs, the McAllen Economic Development Corporation has confirmed.
Ralph Garcia, vice president of Mexico business recruitment for MEDC, said an official announcement could come as early as next month.
“It is an automotive group, investing about $30 million and creating about 1,500 job,” Garcia told the Rio Grande Guardian. “They are going to move very quickly. They will be building their own manufacturing facility, approximately covering 277,000 square feet, in Reynosa. But they will also be absorbing space in McAllen. They are going to be doing their distribution out of here, with 120,000 square feet on the U.S. side. Hopefully, we will be able to announce this next month. We will be able to share the name of the company and where they are coming from. It is exciting.”
Garcia said it has been a while since MEDC had a big project come to the area. “A lot of that was down to the state of the economy. Security, also, has also been a factor. But as we focus on those issues and really take them on and find ways to develop a proactive approach, we will see the synergies. That is what is happening now.”
Asked if the company is moving to Reynosa to supply parts to the big Kia Motors manufacturing plant currently under construction in Monterrey, Garcia said: “No, they already serve the auto industry. They are probably one of the larger players in the industry.”
Nonetheless, Garcia said Kia’s decision to build a $1 billion state-of-the-art facility in Monterrey, capable of producing 300,000 vehicles a year, is having an impact locally. To capitalize on this, McAllen EDC is having a Korea Day on February 8, Garcia said. An MEDC delegation visits Korea at least once a year.
“We want to reach out to the Korean community. We know a lot of suppliers for Kia are moving to the area. They are looking at Monterrey, they are looking at Coahuila and they are looking at Reynosa. To network with our Korean community we are going to have a Korea Day, scheduled for February 8. We want to work with the Korean community, to network and leverage the relationships we have, so we can assist with these potential projects that are coming through.”
Garcia said MEDC is also working on two other manufacturing projects that are close to fruition.
“We expect to be able to say more next month. One of the projects will add close to 400,000 square feet of industrial space and will add another 2,000 jobs to the area. The interest is there for companies to come back to Reynosa. I think when these prospects see these synergies and they see new construction it just makes the area more attractive because it shows activity going on. It is vibrant. We are also seeing a lot of companies continuing to hire. A lot of expansion is expected this year. Good things happening.”
Asked what he puts all the new activity down to, Garcia said: “Automotive is really taking off. We are seeing a lot of growth in automotive in Mexico and good activity from companies looking to supply this industry. Plus, the devaluation of the peso is having an impact. It is making Mexico extremely attractive as a country to bring in new investment.”
But surely a decision to build a new plant is based on long term considerations not the current value of the peso, Garcia was asked. He responded: “It is the icing on the cake. If you look at companies and how they stay competitive, they are looking at strategic markets to serve and to manufacture from. Mexico is attractive to them but with the recent history of violence, that deterred a lot of companies. As that has gone down quite a bit the interest is back, the value of the peso is favorable for them. It allows companies to make quick decisions, to take advantage of the situation. We do not see the peso jumping back to a higher level any time soon.”
Garcia said he had a meeting with land developers last week to discuss inventory space in Reynosa.
“In terms of availability we have about 3 million square feet of space to market. But, less than 700,000 square feet is Class A. The rest is Class B or C. And so for a company coming in the market, looking at the area, that plays a role in determining where they want to go. In other communities we have spec space that has been built. It is new, and it is sitting on the market. And so when they visit those communities a lot of time they go to those buildings and they feel pretty comfortable, and say, you know what, the building is nice, it is ready to go, this is just what we need to do. So, two of our developers have stepped up to the plate and will probably be starting some speculative buildings in Reynosa, which is good because it is new construction. We have one developer that is already building 118,000 square feet and that will probably come online by March. It is important for us to have that inventory available.”
Asked to respond to those who would argue that creating jobs in Reynosa does not help McAllen or other cities in the Valley, Garcia pointed to analysis from the Federal Reserve Bank of Dallas that says otherwise. The bank’s El Paso-based economist, Roberto A. Coronado recently spoke at a UT-Rio Grande Valley-sponsored event in McAllen. “A ten percent increase in maquiladora output leads to a 6.6 percent increase in total employment in McAllen. The bulk of the impact is on the service of the economy,” Coronado said.
Garcia said: “McAllen is really dependent on the Mexican community. As good things continue to come to Reynosa, it adds growth to our community. Every time they create jobs and add more investment to Reynosa, something comes back to McAllen or one of our neighboring cities. It is very favorable. It creates jobs and more importantly it creates a stability in economic growth for our community. That is something some people do not take into consideration. If we were not doing what we are doing today to attract more investment in manufacturing I think that as a community, we would be suffering.”