Toyota Plans Make Texas A Player In Auto Industry
DALLAS (AP) -- After bagging Toyota's North American headquarters and being picked as one of four states competing for a $5 billion Tesla "gigafactory," Texas boosters are asserting the Lone Star State's emergence as a major player in the American auto industry.
Even before Toyota's bombshell announcement April 28 that it was moving its corporate nerve center from California to the Dallas suburb of Plano, the second-largest state already ranked No. 6 for automotive manufacturing employment, with 476 automotive manufacturing firms employing 33,800-plus workers, according to a 2013 state report.
At the 60-year-old General Motors plant in Arlington, a new SUV rolls off the assembly line every minute.
Down the Interstate-35 corridor, Toyota workers build Tundra and Tacoma pickups at a 2,000-acre site in San Antonio.
In Denton, heavy-duty trucks roll out of a Peterbilt Motors plant, the county's largest employer. And across Texas, shops and factories make components ranging from plastic emission detectors to tires and windshield wipers.
"We are starting to reach the point where Texas is a center for the automotive industry," economist Ray Perryman, president of the Perryman Group in Waco, told the Fort Worth Business Press (http://bit.ly/QJuHbK ).
The Toyota coup, which has been hailed as one of the most significant corporate relocations in years, was a major victory for Gov. Rick Perry and could bolster his prospects for a second presidential run in 2016.
A $40 million incentive from the governor's Texas Enterprise Fund helped convince the world's largest auto dealer to move its headquarters from Torrance, California, to Plano.
Perry also is at the center of efforts to convince electric car maker Tesla to make Texas the home for a battery factory expected to employ about 6,500. "The cachet of being able to say we put that manufacturing facility in our state is one that's hard to pass up," Perry recently told a Fox Business interviewer, pledging a "major effort" from Texas to land the factory.
The California-based car manufacturer, co-founded by Elon Musk, announced Texas, Arizona, Nevada and New Mexico as the four competitors for the plant, which Tesla officials have dubbed "the gigafactory."
Reno, Nevada, is thought to be the front-runner but San Antonio officials are also making a strong push with an incentive package valued at $800 million, according to the San Antonio Express-News.
Tesla hopes to announce the site within the next two to three months after winnowing the field to two semifinalists. The company plans to complete the 10-million-square-foot factory by 2017.
"It's the most significant economic development project in decades," said John Boyd, president of the Boyd Company Inc. of Princeton, N.J., a site selection firm. "It's not only huge, it's cutting edge," he added, citing "new technologies" expected to emerge from the project.
Boyd called Toyota's move "the biggest headquarters coup for the Metroplex" since American Airlines moved to Fort Worth from New York City in 1979.
The move, he said, will have a "tremendous impact" on the Metroplex economy by importing more than 4,000 highly paid corporate workers who will become new customers for services throughout the area.
Plano Mayor Harry LaRosiliere said discussions with Toyota began in February and were conducted under a veil of secrecy. The small circle of Texas officials involved in the discussions referred to the potential deal only as "Project 1," never mentioning Toyota by name.
"With our major North American business affiliates and leaders together in one location for the first time, we will be better equipped to speed decision-making, share best practices and leverage the combined strength of our employees," Jim Lentz, CEO of Toyota North America, said in a statement.
Groundbreaking for the Toyota campus is expected this summer, with the auto maker planning to make the move in phases through early 2017, LaRosiliere told the Business Press.
Plano, a high-growth city of 260,000 people 19 miles from downtown Dallas, will be the epicenter of the economic growth. But potential rewards from the Toyota relocation are expected to spill out across North Texas, stoking an already vibrant automotive presence that includes the GM and Peterbilt plants, scores of suppliers, parts makers and distributors, and hundreds of dealerships.
"Whether they locate in Plano, Fort Worth, Arlington, Dallas, it continues to build the reputation of the North Texas region as a place corporations are increasingly coming to," said Wes Jurey, president and CEO of the Arlington Chamber of Commerce. "So that in itself helps us sell our communities."
Jurey said that Metroplex leaders have already begun making a major effort to draw more and more suppliers to the region to complement the growing manufacturing presence in Texas.
"Every time you get a major manufacturer of anything, every time you get to the top of the food chain, that one single company can be leveraged to attract the entire supply chain that supports the company," he said. "The real opportunity becomes how much of the supply chain can we capture, build, recruit, grow in Texas. It's certainly an area we're focused on, and I think it's an area of focus for Texas."
In North Texas, say Jurey and others, the opportunities encompass not only just commercial automobiles and trucks but an entire "mobility industry" that includes jet fighters made by Lockheed Martin, choppers made by Bell Helicopter Textron and locomotives made at the General Electric plant in Fort Worth — a genuine "planes, trains and automobiles" scenario.
In many cases, says Jurey, "it's not a big step" for a supplier of plastic parts for an automobile, for example, to produce a plastic component for a jet or helicopter. "We're building a lot of vehicles in Texas," said Jurey. "We're building planes, we're building missile systems, we're building cars, we're building locomotives, all in Texas. They all have a supply chain they depend on to supply those parts."
Landing the Toyota headquarters underscored political and corporate leaders' longstanding boast that Texas, with its low-tax policies and business-friendly regulatory climate, is "heaven on earth for manufacturers," in the words of Tony Bennett, president of the Texas Association of Manufacturers.
Lawmakers last year took further steps to lure out-of-state industry by re-instating a tax break for research and development and extending a school property tax abatement for capital intensive projects.