MCALLEN, RGV – President of the McAllen Economic Development Corporation, Keith Patridge, gave an overview of the organization’s role in expanding the manufacturing sector in the region and the importance of the cross-border relationship.
Speaking to the RGV Hispanic Chamber of Commerce’s 2017 Leadership Academy, Patridge said the border economy has become very appealing for industrial development, including how valuable the McAllen-Reynosa area has become.
Patridge quoted a report from the Federal Reserve Bank of Dallas that said for every 10 percent increase in output by the Reynosa manufacturing sector, the number of jobs on the U.S. side of the border increases by 6.6 percent, thus emphasizing the “substantial connection” between the two cities.
The McAllen Economic Development Corporation’s (MEDC) goal is to bring industrial jobs into the region, by explaining to companies the benefits of the border region: lower labor costs in Reynosa and the growing market in McAllen, Texas and the United States, Patridge said.
“We’ve always looked at McAllen-Reynosa as a single city that happens to have an international border running through it,” Patridge said. “Now when you put on top of that the fact that on the south side of border we have some of the most competitive manufacturing costs in the world and on the north side of town, it’s the largest market in the world. You can see what kind of an attractive benefit we offer to companies here in the border region.”
Patridge said the MEDC created 24,000 jobs in Reynosa last year, with 3,070 jobs on the U.S. side of the border. The 3,070 jobs created in the U.S. generated $66.4 million in wages and property taxes for McAllen, a worthy investment, Patridge argued.
“If you look at our budget, which is a little over a million dollars a year, and you look at what we returned, $66.4 million, I’ll ask you, you’re all business people, is that a good return on your investment?” Patridge said. “I bet you’d do it, wouldn’t you?”
Patridge said the organization’s focus on creating industrial jobs stems from the need to increase money flow in the Valley to generate sales in the retail industry. Since more economic development organizations are focusing on developing retail, Patridge argues there needs to be reliable jobs so people can spend in retail.
“This is important I think because a lot of our EDC’s focus on retail, and retail is important because retail generates sales tax revenues for communities,” Patridge said.
“But if you ever think through that, what generates the money that people spend in retail? If you don’t have basic jobs that is bringing new money in, that people are getting a paycheck, they’re not going to have any money to spend in retail, so it doesn’t generate. So that’s why when we were created 30 years ago the focus for us was, focus only on industrial because that’s going to create the jobs that’s going to generate the revenue that’s going to cause the retail sales.”
Patridge said when retail companies contact the MEDC, they want to know what kind of job growth exists in the area and if the population generates enough income to spend in retail.
“So, it’s a symbiotic relationship and that’s why we focus on industrial rather than on retail,” Patridge said. “They’re both very important. You have to have them both, but when you start looking at what generates the fund for retail it’s the baseline jobs, the manufacturing jobs, the call centers jobs, those types of jobs are what really generates the revenues.”
When asked by an audience member how the region plans on retaining college graduates in the region rather than losing them to bigger cities with more job opportunities, Patridge emphasized how it’s a loss for the Valley when students leave. Adding that cities invest thousands of dollars to educate students from Pre-K to college, only to lose them.
“The future of the Valley and our opportunity hinges upon skill sets, but the problem that we have is skill sets is in demand everywhere,” Patridge said. “If we don’t also concentrate on the communities forcing the schools, and this means really Pre-K to 12, as well as community college and universities, to focus on helping the community bring the jobs in.
“What they do is educate them and then they ship them out, and that doesn’t do anything for us. It’s a zero-sum game because we’re paying to get them through the Pre-K to 12, then the family or they’re going in debt to get their college degree and if we lose them to San Antonio, or Austin, or Dallas or Detroit, what we have done is its just cost us as a community somewhere around 300 to 400 thousand dollars of taxpayer money to teach that student Pre-K to 12.”
Patridge compared losing students to giving away a new Maserati or Porsche to a stranger for free, an expensive investment given to another city other than the Valley.
“We as a community have to start looking at it from that standpoint,” Patridge said. “We’re producing assets, those assets when they graduate are now ready to start producing a return on the investment. If we don’t keep them, we are just giving that asset away free. So that’s the number one issue.”
Editor’s Note: This is the first in a two part series based upon RGV Hispanic Chamber of Commerce’s 2017 Leadership Academy visit to the McAllen EDC’s offices and the McAllen Foreign Trade Zone. Part Two, focusing on the analysis of MEDC Vice Presidents Janie Cavazos and Ralph Garcia, will be published in Monday’s PM Edition.