In a state that is larger than life in many ways, San Antonio measures up when it comes to the manufacturing sector. It is the 4th largest market in the state employing 57,000 workers and paying them 11% more than other workers in the city.
In 2011 its economic impact was $22.5 billion.
Companies such as Boeing (IW 500/13), Caterpillar (IW 500/23), Chromalloy, Frito-Lay, Johnson Controls (IW 500/32), Pratt & Whitney, Tenneco (IW 1000/533), Toyota (IW 1000/8) and Valero (IW 500/8) have facilities in the metropolitan region.
Why do these companies move here, stay and expand?
One reason might be the city’s approach to doing business. “We are from the old school of looking each other in the eye and building relationships on trust and accountability,“ explains Mario Hernandez, president of the San Antonio Economic Development Foundation.
The organization recently did a survey on the city’s image and found that working as a team and getting things done quickly are top on the list of a good business environment. San Antonio does all of those things and what’s more it’s making employees happy; it ranked ninth on the 20 Cities with the Happiest Young Professionals in 2012.
Happy and successful would be a good way to describe one of San Antonio’s companies, Avanzar Interior Technologies, which supplies seats to Toyota through a joint venture with Johnson Controls. The story of how Avanzar was created to serve Toyota and why Toyota set up shop there to begin with is quite interesting.
Berto Guerra, CEO of Avanzar, explained that over twenty years ago Henry Cisneros (former Mayor of San Antonio from 1981 to 1989 and former Secretary of Housing and Urban Development) met Dr. Shoichiro Toyoda. At every available opportunity he would suggest that Toyota open a plant in the city. Cisneros even hosted Dr. Toyoda at the White House.
Cisneros efforts were successful. In 2003 Toyota announced it would invest $800 million in a new Tundra pickup truck plant. The factory opened in 2006.
“The fact that the city has a low cost of living, a great workforce, good weather and a governor that was hungry for more business in the state, all combined to attract Toyota,” said Guerra. Of course, Guerra points out, when company executives went to a football game and saw all of the pick up trucks that didn’t hurt either.
In 2004, Toyota chose 18 suppliers that would locate on the same location as the factory. The largest supplier, and most complex, was Avanzar which was tasked to manufacture automotive seat systems and interior parts for Toyota’s Tundra full-size pickup truck.
The pressure was on Avanzar. “Our culture was different because we couldn’t fail,” explains Guerra. “We had to prove to Toyota that they made the right decision.”
Well the decision seems to be right given the fact that for the past four years JD Powers has given Avanzar its highest quality award. (The award came through parent company Johnson Controls.)
In addition to making sure that his plant is producing quality work for Toyota, Guerra wants to make sure that the city continues to be competitive. To that end he serves on the Texas Water Development Board. The board is working towards a diversified water supply to enable future growth.
Keeping Manufacturing in the US
Another company committed to the region is HVHC Inc. (which is a subsidiary of Highmark Inc.) In 2011, the manufacturer of eyewear had a small presence in the city but was determined to expand by building another factory.
“We did a full site selection process and considered locations across the nation,” explains Jim Eisen, president and co-chief executive officer. “But San Antonio stood out for a number reasons with the quality of the workforce at the top of the list. The work ethic was strong as was the reliability of the workers and there was enough talent located within the city that could be trained as well.” Part of that workforce comes from the large military population in the city.
The other important factor for choosing San Antonio for the site of its new factory, built last year and employing 500, is the close working relationship the company had with the city, Mayor Julian Castro and the manufacturing community in general. “We work closely with the San Antonio Manufacturers Association on driving manufacturing value through conservation or products and raw materials,” says John Kay, executive vice president of Manufacturing and Distribution.
The company has been a supporter of the mayor’s SA2020 development initiative and the new plant is the company’s second in the area. In 2012 the company relocated its headquarters of Visionworks (formerly Eye Care Center of America) and the New York- based operation operations of Davis Vision, its managed vision care arm, to downtown San Antonio. This latest facility is slated to produce two million pairs of eyeglasses per year.
And the company has an overall objective of keeping the majority of its manufacturing in the U.S. “We have made the decision to manufacture in the U.S. as it enables us to control the entire value stream process from beginning to end,” says Eisen. “We believe the talent and technology is here and it will give us a competitive edge in the market.”
Talent is readily available. Adding the population of the universities to the community college system there are 150,000 college students in the area, says Hernandez.
And given the fact that recently a number of manufacturing companies have moved or expanded in the area including, Haliburton, Maruchan ( food), Nexolon (solar energy), Bergstrom Industries (energy) and NBTY, those students should find jobs.
In fact a number of students will be needed for one of the fastest growing industries in the area which is solar energy. It began in 2011 when Mission Solar Energy decided to build a silicon-based PV facility in the region. The plant was completed last year. CPS Energy already has more than 130MW of solar power in commercial operation as part of San Antonio’s New Energy Economy, which aims to meet 20% of its electricity demand with renewable energy by 2020. An agreement between CPS Energy and OCI Solar Power to construct a 400MW solar project will is expected to push Texas into the top five solar-producing states, once again reinforcing the state’s larger than life reputation.
Not matter what direction the growth for the state, and for San Antonio in particular, moves the basic tools of business will apply. "Business here is built on trust and cooperation," explains Eisen. “We sit face-to-face, map out our plans (sometimes on a napkin in the restaurant) and shake hands.”