August 7, 2016 Brian Kelsey

Texas continues growth into auto industry powerhouse

This story was written by Claudia Grisales and appeared in the Austin American-Statesman.

Texas continues growth into auto industry powerhouse

Toyota’s major operations helping drive thousands of auto industry jobs in the state.

The plant came to Texas when the state’s major auto industry operations were mostly limited to a General Motors plant in Arlington. That’s changed dramatically since.

In addition to growth at its San Antonio plant, Toyota is now centralizing its North American headquarters and other operations in Plano. The news came on the heels of a GM announcement last year it would infuse its Arlington plant with a $1.4 billion expansion.

Put it all together, economics experts say, and Texas is a becoming a key player in the auto industry.

“During what has been a very challenging period overall for the auto industry, Texas has fared pretty well,” said Austin economist Brian Kelsey, founder and principal at economic research firm Civic Analytics. “The industry’s future here appears to be bright.”

The state’s manufacturing sector is seeing a nice bump from the growth of Texas auto industry operations as the tally of related executive jobs grow, experts say.

Austin economist Angelos Angelou, who says the Toyota plant’s economic impact has been “phenomenal,” estimates that the automaker’s manufacturing facility and its new Texas headquarters could generate more than $3 billion to $4 billion in personal income totals for the state.

Angelou predicts more job growth in the North Texas area such as the Dallas-Forth Worth metroplex or somewhere along the Interstate 35 corridor between North and Central Texas.

At this rate, “I think the state could possibly attract another (auto) manufacturer,” said Angelou, founder and principal executive officer of Angelou Economics. “It will be more on the way I would say.”

Texas currently has about 38,000 jobs in motor vehicles and parts manufacturing, Kelsey said. That ranks seventh among all states for such jobs, up from 10th in 2003, Kelsey said.

As of 2014, the auto industry added an estimated $4.8 billion to state gross domestic product, he said. While that figure is dwarfed by larger sectors such as energy, it is becoming an increasingly viable source for jobs.

Only two states have fared better when it comes to adding jobs in the sector since 2003.

“We’re still a relatively small player in the market compared to the industrial Midwest, but, among southern states, only Tennessee and Alabama have added more jobs than Texas in motor vehicles and parts manufacturing since the Toyota announcement in 2003,” Kelsey said.

In terms of states with a larger share of auto industry jobs, only Alabama has seen a faster job growth rate than Texas, Kelsey said.

Since 2003, “only Alabama has grown faster” than Texas in terms of states with at least 25,000 such jobs, he said.

‘An auto-producing state’

By next year, Toyota could bring the combined number of Texas workers at its San Antonio plant and workers for its new North American headquarters in Plano to more than 11,000.

Of that, the Toyota Texas plant has about 7,000 workers, which includes 3,200 direct Toyota employees. The rest are employees who work for 23 on-site suppliers located on the campus, said Mario Lozoya, Toyota director of government relations and external affairs.

“Texas sells a lot of trucks, so it was the right decision to build trucks in Texas,” Lozoya said reflecting on the plan during a recent media tour of the plant.

Angelou estimates Toyota has created as many as 15,000 to 20,000 direct and indirect jobs jobs in Texas.

“They have basically solidified Texas as an auto-producing state,” he said. “Toyota has been a savior of the auto industry in Texas and single-handedly transformed the state as a place for auto manufacturing.”

When Toyota made its 2003 announcement it would build a truck plant in San Antonio, the automaker said it had plans to employ 2,000. In November 2006, its first Toyota Tundra rolled off the line, followed by the Toyota Tacoma in 2010.

The plant’s progress in Texas has not been without its setbacks.

The 2008 recession forced the plant to shut down for three months. The Japanese earthquake and subsequent tsunami in 2011 triggered new challenges for operations.

And a storm in May blew a hole larger than a football field in the plant’s roof that required significant repairs.

Still, the facility is on track to make up for that lost production and bulking up on worker hours to boost output. The plant, which is capable of cranking out 200,000 trucks or more, added a third shift of workers and is now on track to produce 250,000 trucks this year, said David Crouch, vice president of administration and production control for the facility.

“Basically the parking lot empties and then the parking lot starts to fill back up,” he said of the plant’s employee lots now. “And actually we’ve had to build a new parking lot on the east side of the plant because we ran out of parking space.”

‘Doing very well right now’

Toyota is also in the midst of moving 4,000 workers to its new North American headquarters to Plano by the first quarter of 2017 — consolidating workers from at least four U.S. cities. Those who decide not to relocate will be replaced by newly hired workers, Lozoya said.

“The philosophy is we will be able to work together in a better way,” he said of the new headquarters.

Angelou said the state has also navigated many challenges in its pursuit of the auto industry, such as when GM has entertained a closure of their Texas facility. But economic development efforts, in the end, appear to be paying off, he said.

“With the GM facility in Arlington, there were times when they were thinking of closing it,” he said. “We’re not Alabama or Indiana, but you know it’s a huge industry. It’s doing very well right now. And I think we have two of the greatest auto manufacturers in GM and Toyota.”

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