MCALLEN, RGV – Mike Willis, executive director of South Texas Manufacturing Association, says cities should focus on sectors other than retail.
Willis shares a lot of data with city officials and believes every city has to decide how they allocate their resources based on the return of the investment. One way to do this is to consider investing in other industrial sectors like manufacturing.
“A lot of cities are focused on retail, but lately employment growth in retail has decelerated dramatically and the growth of sales tax have certainly moderated at best,” Willis said.
“And the other thing is Hidalgo County and the McAllen metro area is well saturated with all the big box retails that we think of when we talk about recruiting and economic development for retail. So cities need to look at their unique competitive advantage and focus on more than one industry.”
According to Willis, the manufacturing sector in the region is very small compared to retail, education, healthcare and law enforcement because the population growth drives demand for these services. He says one contributing factor is that it is difficult to convince the population to pursue a degree appertaining to advanced manufacturing when they don’t see high profile companies in the area.
However, he insists that there are a lot of Fortune 500 companies throughout the region and across the border. So, STMA is working on promoting awareness and career opportunities in manufacturing.
“Manufacturers by nature are not selling products to the local community like a bank or a hotel so, they’re not interested in using their billing for a billboard to improve awareness,” Willis said.
“STMA is trying to help change that model because we can’t not tell people about ourselves and then wonder why no one wants to work for us or knows anything about our industry. As an organization we’re trying to promote awareness and career opportunities.”
Willis told the Rio Grande Guardian that economic development corporations have the opportunity to recruit major companies and two of those that are fertile ground are manufacturing or customer care centers. In the region, about 10,000 people are working at customer care centers, or call centers, for an average of $11 per hour. However, the manufacturing sector still has a chance to grow, he claimed.
“If you don’t have oil in the ground you can’t develop an energy sector. Construction is going to be driven by either manufacturing relocations, housing or retail growth,” Willis said. “So I think we’ve got a good opportunity. There are reasons why we shouldn’t give up on trying to grow the manufacturing sector, but it has to happen incrementally.”
Recently, several site selectors from Germany paid a visit to the RGV and toured the region for possible relocation. People such as Pat Hobbs, executive director of Workforce Solutions Cameron, and Keith Patridge, president and CEO of McAllen Economic Development Corporation, told the site selectors to look at the region as a whole–including the border towns of Reynosa and Matamoros to see the full scope of manufacturing.
Willis says Reynosa has about 130,000 people working for 150 to 200 major manufacturing plants. And based on the findings of Roberto Coronado, an economist with the Federal Reserve Bank of Dallas, roughly 25 to 30 percent of all jobs in Hidalgo County are here as a result of the maquila industry.
“Coronado’s studies show that for every 10 percent increase in maquila output, or goods produced in Reynosa, there’s a 6.6 percent job employment increase in the (Upper) Valley,” Willis said.
“The manufacturing sector only grows one percent and transportation logistics grow six and a half percent. But other sectors such as finance, insurance and real estate–all of that has a big multiplier effect on this side of the river so we are definitely tied in with the help of the manufacturing sector (across the border).”
Because of the large footprint of manufacturing in northern Tamaulipas, Willis says the Valley has the opportunity to recruit component manufacturers that are capital intensive and advanced manufacturing types of companies where labor is a small part of the workforce.
These companies can relocate to the RGV because the region has lower infrastructure costs and there are also concerns about operating in Mexico due to their security issues. Because of this, Willis says EDCs are taking advantage of promoting operating in the United States.
“Companies in Mexico may relocate somewhere in the United States instead of Europe, Korea, Japan or China, but we have an opportunity with our location advantage. We’re the closest you can be to Mexico without being there,” Willis said.
Willis says one reason manufacturing companies in Mexico are looking to either outsource to third party component manufacturers in the U.S. or moving work across the river themselves is because there may be a requirement for higher U.S. content in NAFTA produced goods. So, a lot of manufacturing companies globally are doing scenario planning.
For the last six to eight years, Willis told the Rio Grande Guardian, a few companies have opened up manufacturing operations on this side of the river. He suggests from an economic development perspective that the cities of the RGV should continue trying to recruit manufacturing.
“There’s a lot of interest in prospects up and down the Valley the different EDCs have been working on and it’s a tough sell to get a workforce developed when you don’t have the jobs. But there are a lot of opportunities and some of these jobs are transferable into other sectors as well such as transportation companies, hospitals, school districts and manufacturing companies. STMA is working with schools to incorporate skills such as maintenance technology or megatronics,” Willis said.
“So, I do think we’re going to have a lot opportunities. There’s going to be a lot of good job opportunities in the future, but the challenge is how do we convince more young people to choose those career paths so that we can point to them as the talent pool we need to hire for these companies that we try to recruit to the area.”
STEM and FIRST RGV
Willis works with a lot of the EDCs around the RGV for recruitment as well as data tracking. Some of this data includes the educational attainment rates and the percentage of the students graduating with a STEM(science, technology, engineering and math)-related degree at the university level. Willis says this data is critical for recruiting high quality companies to the region. However, degrees in the STEM field are not the only skills companies look for.
“For a lot of manufacturing occupations, the middle skill jobs are also in really high demand in the Valley. You can attain those skills with a technical degree from a community college or a technical school,” Willis said.
“Those skills are critically important to getting any manufacturing company to locate into the region. I think the STEM skills, knowledge and awareness helps for the future and the community college and technical school training helps people prepare for the jobs that are here today.
One way STMA is encouraging the younger generation to pursue degrees in the STEM field is by supporting FIRST RGV. FIRST stands for ‘For Inspiration and Recognition of Science and Technology.’ It is a non-profit organization devoted to helping young people discover and develop a passion for the STEM field.
The two organizations have been in collaboration for several years and Willis believes FIRST RGV is one of the best ways to get children interested in the STEM fields.
“[FIRST RGV] gives kids an opportunity to learn a little bit about a lot and opens up awareness to a lot of career opportunities that they would otherwise not know about,” Willis said.
“STMA thinks it’s a great way to promote manufacturing, engineering, technology and all of those degrees that a lot of kids shy away from that pay higher wages and offer more job security than a lot of the ones that are more popular among young people.”
Jason Arms, president of FIRST RGV, said his group occasionally presents their programs to STMA’s membership to attract their engineers and business leaders to mentor more robotics teams. Arms says when people talk about manufacturing, some people think that that’s only a blue collar career but, it’s really not.
“Our 3,800 kids in our program all across the Valley are aspiring to be the next level engineers and repair personnel for what is popularly being deemed down here as advanced manufacturing,” Arms said.
“Our kids are the ones that are going to be designing and repairing those future systems and are also doing their part to inspire the next generation into whatever emerging technology is available there, so STMA is clearly a partner that we’re very proud to be aligned with.”