This program is supported by Texas Mutual Workers Compensation Insurance.

Welcome to Business of San Antonio.

I'm Henry Cisneros, and you've heard of the incredible growth between San Antonio and Austin.

That corridor is becoming an economic powerhouse with an expected population in 25 years that will reach 8 million people.

But this explosive corridor actually continues beyond San Antonio to the south.

The region from San Antonio to the Rio Grande Valley, the borderlands, and then into Mexico is the next superpower of, for example, automotive manufacturing.

There are other industries as well.

This stretched has been named the Texas Mexico Automotive Supercluster, a regional hub.

We'll learn more about this region with George Torres, president and CEO of Interlinked Trade Services in McAllen, and David Marquez, former executive director of economic and community development for Bexar County.

Gentlemen, welcome to Business of Business.

I'd like to begin by just setting the stage for our viewers, for what's the region that we're talking about from San Antonio South.

There are any number of places that are just exploding economically.

If we go to the valley and begin there.

Of course, the space activity at Boca Chica, and then all along the border there, the Rio Grande Valley is now about 1.5 million people.

Corpus Christi, though they're having their water issues right now, is developing its port and growing.

Laredo is a phenomenon.

Laredo is the largest crossing point by cargo value between any two land ports in the world.

Believe it or not, the volume that comes across at Laredo to the to the west along the border, is a project called Puerto Verde in Igel Pass, which will result in new bridges there and then, of course, all across South Texas, thanks to fracking and natural gas, their communities that were once poverty stricken and now are growing very rapidly.

And then there is what's happening in northern Mexico.

People have their own images of Mexico.

But the truth of the matter is northern Mexico is becoming an industrial powerhouse as well.

Monterrey has always been strong.

People talk about Monterrey as the combination of what we in the United States have in Cleveland, Pittsburgh and Detroit automotive, steel, chemicals, glass, beer and many, many of the things that are manufactured there.

And then this automotive activity has gone to plants in Saltillo.

Dorian, Queretaro to the farther south, San Luis Potosi and to the west, Baja California.

These are real goods are being produced there, automotive parts that find their way into the to the facility here in San Antonio, some with joint ownership.

So there's no question there's some phenomenal things happening across the region.

David, I've admired your work for a long time.

David worked for Bexar County as its chief economic development officer, and is credited with the original paper outlining the potential for an automotive cluster.

Tell us what you were thinking then, how you've seen it developing since.

I think, Henry, you know, when Toyota came in early 2003, but we created the office for Economic Development in 2005, and we had one mandate.

Toyota's here.

Let's maximize the benefit to our community.

This is the start of a new economy for Bexar County, and particularly for South Bexar County.

And so Nelson Wolff decided that we should have a full time economic development office.

And he appointed me to be the first director, and I did that for the balance of my career.

So initially, we're working with, of course, as a partnership here with the other members of San Antonio, the back then the San Antonio Economic Development Foundation in the city of San Antonio with the state, CPS, energy and others.

And we're developing our pitch to go after companies and try to leverage this this win into further wins along the supply chain of Toyota, because once you've landed Toyota, you're you're the golden child.

You know, they've proven they brought.

23 supplier firms with them.

Onto those initially 15.

That was my first job was to bring those first 15 on with their incentives.

Then it was 18 and 21 and 23.

And I think they're up to 2425 now.

A tremendous growth, really a big opportunity.

But beyond that, there were other opportunities to pursue further suppliers.

Those are what are known in the industry as tier one suppliers.

Tier one suppliers.

When the product leaves their factory, it goes directly to be assembled onto whatever the component is, in this case a tundra.

That's the definition of tier one.

That's interesting because what Toyota did for the first time ever, when they've assembled the plant, was to put all of the suppliers in an industrial park nearby a campus.

And so those, those, those final products are literally conveyed into the main plant and go right into to to the assembly.

Yeah, it has used advantages.

There's a few disadvantages.

I think this is still the only Toyota plant that I'm aware of in the world that has an on site supplier.

A major advantage for us, because I've often said any one of those plants would have been a newspaper story by itself.

We have 25.

Of them.

There's no question about that.

They get buried in the.

So let's go from tier one where you were headed beyond.

So the in order for the tier ones to be successful, they would like their tier two is to be nearby as well.

The whole thing is driven by logistics.

Logistics drives the cost that you most can manage.

You can deal with the power, the water, the labor, but the logistics can either make you or break you.

And the longer the logistics chain, not only do the costs rise, but the risk rises.

Talk about the logistics chain in geography.

So from when the Toyota Tundra rolls off the end of the assembly lines, it's essentially fully built.

On the other end is the end of a whole series of rivers of supplies that wind up going in to make that tundra.

And if you look at the all of the components that make up a vehicle, something like 80% or more come within 400 miles of that final assembly facility.

That's really what it is.

It's not a manufacturing facility, per se.

It's mostly a final assembly facility, and it's subcomponents from tier one suppliers who got their subcomponents from tier two suppliers and on down the chain.

So that 400 mile radius is the key from that Toyota plant.

You put the pin in the middle, you draw the 400 mile radius and you see all of Texas and you see parts of Louisiana.

Maybe.

But we don't think of it that way here.

We think of it as to the South.

We think of it as Laredo.

So what is what is the state of play?

Where are the suppliers?

They're all up and down that that NAFTA corridors, we used to call it the I-35 corridor, the Pan Am corridor and and more and more down into into the valley.

In northern Mexico.

In northern Mexico.

The cities that have that, the 400 mile, 80% play for us are mostly in Monterrey and in South Leon.

And some of those players I know have facilities in Leon.

They do, but they're also serving the Mexico City cluster.

There's a further clusters down and get into those areas, because if you took the pin there and came 400 miles, you would pick those central areas up.

So that's a place to be if you're serving perhaps both clusters.

Okay.

So from our standpoint, San Antonio's, what did the advantages of having such an automotive cluster.

Well, I began my career as a machinist, although not in any of us in remanufacturing it for the Air Force as a civilian.

But I recognized that advanced manufacturing, I think, perhaps more than any other industry that we have, has the ability to break the cycle of poverty in our community because it creates, at scale the largest number of jobs that can lead to the middle class that meet our population, where they are in terms of their job experience, their education level.

People there.

Can be trained.

For, they can be trained for these jobs and wind up in a, again, a middle class job that with benefits.

And that's at scale.

We're not talking about 20.

Come back to that because I want our viewers to know what other sectors besides automotive are likely to go through this experience with this fertile territory of south Texas and northern Mexico.

Mr.

Torres, tell us a little bit about the valley.

You know the border well, but I think San Antonio's feel a greater distance from the valley than it actually is on the ground three hours away.

Just give us a kind of an update.

Yes.

Well, the Rio Grande Valley consists of about 1.5 million people population.

And it expands from pretty much Romo, Texas, all the way to Brownsville.

And which is what, 100 mile.

It's about 150 mile range.

Okay.

Yeah.

And it borders several Mexican border towns.

So that expands the population to to the Mexican population as well.

So it's.

Those are interlocked interlocking economies.

Yeah.

Exactly.

So like Brownsville and.

It's McAllen far Reynosa and Nicola Lemon and Mir and those, those cities.

So so it's very dynamic.

And like you mentioned, it has been pretty poor for the last decades.

But we're having a surge of investments like you mentioned, especially in the Brownsville area with space and Saronic and LNG.

So it's more of a technology energy.

Let's focus on that for a minute, because I think San Antonio see the headlines about the next launch and can't believe that we've actually reached the point where in South Texas we have what was something like Cape Canaveral or Cape Kennedy.

What's the feeling of that on the ground?

Are there other companies coming in support operations on the ground?

Is the growth palpable?

Yes, most definitely.

There's been many investments down in South Texas, in the Brownsville area for technology and energy.

And now shifting a little bit to the automotive in McAllen, Texas, we just landed a the first tier one manufacturer, Vallejo.

They're going to open up a plant that's going to hire about 500 people.

They're going to be making the main the new generation computer module brain for GM.

So that's going to go straight.

It's a tier one.

It's going to go straight to GM vehicles.

So that's that's something that.

GM has a plant in the metroplex.

Yes in Arlington.

So that's probably the connection that's you mentioned LNG and the Port of Brownsville has invested heavily in handling LNG coming out of South Texas liquefied natural gas, which is then put on ships and is exporting.

We are exporting power out of Texas through Brownsville.

And that port has picked up a good bit.

Talk about that.

Yeah, they're actually the portal.

Brownsville is expanding.

And if you drive by, you can see those big ships with the big spheres of all that.

They're being loaded with the LNG and exported out of the country.

So that's a big a big thing for for the port of Brownsville.

And that's going to continue to expand.

There's billions of dollars of investment created, thousands of jobs.

And like I said, besides space in which is going to be making those technology driven companies.

So the mix of energy and technology and aerospace, it's becoming huge now.

You work all along the border in your business.

Just describe quickly, in a moment your business.

But I have been impressed with the scale of the growth in Laredo, which in my day had about 100,000 people, and I think now it's pressing 300,000.

And if you look at an aerial photograph of Laredo, areas that were ranch land are now warehouses, packaging facilities, logistical centers, and we see the the trucks coming out of that complex.

35 tell us what's actually going on there.

Well, it all started with NAFTA.

When NAFTA came into play in 1994, there was a boom in growth in the industry, the twin plant or the manufacturing assembly facilities in Mexico because of the duty treatment that they had.

And so that exploded.

A lot of new facilities were opened in Mexico, and they started exporting finished product to the United States.

That continued with Usmca.

So that's why we see a lot of a lot of products right now that export from Mexico continues to grow.

Interestingly enough, even with the current trade policy in the United States, we're seeing more and more experts from Mexico.

Mexico is the number one trading partner with the United States.

We've seen products.

The biggest growth is in the in the semiconductor telecommunication computer industry.

The automotive is next.

The automotive has been a little bit up and down.

But because of the a little bit of the uncertainty with the current Usmca situation and the tariffs that we have, but still it's growing.

So look at Mexico from the border southward.

And just give me a kind of a word picture of what you see in terms of industrial activity, jobs, economic development.

Well, companies like I said, they're opening up facilities in Mexico, Monterrey, Saltillo, San Luis Potosi, and those are driving companies to open up warehouse facilities, transportation facilities, because you need the supply chains to be moving those products, raw materials into Mexico for production and assembly and then exported back to the United States.

So that increases the volume of transactions that are going through the border.

And by the way, some of these places are very powerful places.

Monterrey is 5 million people, right?

As a whole, 6 million places, like a couple of million.

Right.

So we're talking big economics.

You mentioned beyond automotive.

And I had asked David earlier between the two of you.

What are the other prospects for a job creation in northern Mexico?

Medical devices, pharmaceuticals?

Yeah.

Pharmaceuticals, medical.

Okay.

And also because of the terrorists with the metals, there's been some growth in the in smelting operations for aluminum and steel in Monterrey in those areas.

So David, your take on what are other prospective areas?

Yeah, I think ultimately we look at it as advanced manufacturing.

So whether you're manufacturing pharmaceuticals or tundra, they're very automated.

They require a lot of computer ized equipment and people to maintain it.

So all of those aerospace is another one that has a great potential for this area.

There's a vision that perhaps the next growth trend will be in a space industry.

And you see how many of these satellites are being launched.

I'm glad you used the word advanced manufacturing, because I have felt for a long time that that is San Antonio's highest potential.

I agree, we are actually reaping it with Toyota, its suppliers, JCB, a British tractor manufacturing firm.

Navistar, formerly International Harvester, all of which you were involved with.

Watching those develop is a dream for me.

I had never imagined that San Antonio would actually be able to have those kinds of facilities.

And the question was on, well, you've got to plant.

Good luck.

You don't have the workforce.

That's all you're going to get.

But since then, all these others have sprouted.

And it kind of is a testament to our workforce.

Our people can do this work, are trainable to do this work.

And Toyota just proved it by putting $3.5 billion into another line at the Toyota plant to employ more people.

In the final analysis, this is about people, families, family budgets, incomes, wages and economic growth.

From that, my I've seen one estimate, David, that it's something like 400,000 jobs in northern Mexico in the advanced manufacturing supply activity.

Does that sound right.

To you?

I think that's about right.

Yeah, that's that's that's the number we would find in our study.

And with your just the layman's naked eye.

How does that look in Mexico?

You are you seeing life improve.

People have additional consumer ability and they.

Most definitely it's shifting more from a regular line employee to more highly advanced technological jobs where they're better paid.

And you can see it if you go to Monterrey, you can see the house in the shopping centers being developed.

On our own.

ATP is all over.

The region, all over.

So so you can see that.

They have 50 stores down there or something.

So, so you can see that people have a better standard of living now than a few years back.

So that's good for us.

That's good.

For you in Texas.

Yeah.

And it's good for us in the San Antonio region.

And it's good for the US.

I mean, we should not forget that message either, as as I mentioned, we're going to be reading USMC and this this region benefits the whole of the United States and North America so much.

Now, it's an awkward subject because we want to stay positive and think about the prospects.

But many people, when they think of Mexico, they think negatively.

They think about issues at the border.

They think about the immigration crisis and the dysfunctions that that has caused.

They think about the cartels and illegal substances coming across.

They think about political instability because headlines are made out of that from time to time.

What would you say to people who don't appreciate the significance of this economic dynamo, because they let those other things intervene?

Are we going to be able to control those other things, get them under control with the help of the government of Mexico?

Of course, in order to have this prospect of an economic zone of massive prosperity.

What do you think?

I mean, there's no denial that things are happening in Mexico, but comparing it to other countries, Mexico still has legal and fiscal stability.

So companies are looking into that even with the current situation of the commotions going on.

So I do see that hopefully things are going to improve eventually.

I know that the current Trump administration is is using Usmca as leverage to ensure that Mexico does their part to to contrast those issues.

So that.

Looks like President Sheinbaum is a serious thinker in economic terms, understands the economic significance.

I mean, I would hope the government of Mexico would understand the immense transformative potential of this set of economic opportunities and get a handle on some of the things that exist there.

The governor of Noble John, which includes Monterrey, was just here a couple of weeks ago, and he clearly gets it and understands, let's not blow this potential.

Our relationship with Mexico over the centuries has been up and down and up and down.

It has the potential to be continually up if we if we can make this grow into a globally significant economic zone.

Exactly.

Which I think will counter most of those other factors.

I think the risk of, you know, expansion of some of these negative things, the cartels, etc., is it if we don't give those population centers down, the opportunities to find those career opportunities to feed their families?

And so this is this is a perhaps our best defense, our best way of helping to ensure that both sides of the border find that prosperity.

If we if we don't take those things into account, I think it creates the formula, the factors that might increase the instability south of the border.

That leads to more of the challenges that we believe on this side.

Mr.. Tell me a little bit about how people across in the valley and along the border see San Antonio.

Obviously, we're talking here about things that had sent Antonio has created and relationships have benefit San Antonio.

But when I was mayor, I got in trouble.

Assuming too much about San Antonio's relationship with the region.

Once I called San Antonio the gateway to Mexico, and the Laredo leaders went out of their minds.

And then I talked about San Antonio as the capital of South Texas.

And the Valley people said, no, we're the capital of South Texas.

How do you think people view San Antonio?

I think that view is shifting to a more positive, more opportunity view.

Obviously, most people came to San Antonio for to Fiesta Texas to see the Spurs and all that.

Now we're thinking more of, okay, San Antonio is growing in the automotive industry and other industries.

How can we support San Antonio?

How can we as a region?

We're doing our thing as a region in promoting industry, the atom clusters, we have the economic developments, other entities such as cost that are bringing the Mexico automotive clusters to the region to sell them, the opportunities that we can have in South Texas.

So now we understand that.

More of an economic relationship.

More of an economic how can we partner up, how can collaborate with you to develop that?

Those automotive, tier one, tier two suppliers.

And how do they see Austin and San Antonio is that people see that as a region in the making?

Yes, definitely.

Actually in some conversations that we have had is Austin, San Antonio and Houston, that that triangle.

Area with us.

So some people talk about a different triangle than the traditional Austin, San Antonio, Dallas and Houston, but Monterrey and all of South Texas, which is a I mean, that's a pretty powerful place to be for what's coming.

David, how do we prepare our people to be to take full advantage of this?

The answer, of course, is obvious education.

But what specific initiatives do we have to put in place that we don't have now?

I think it's surprising, perhaps, to me.

And of course, you come from that part of town and I'm just going to use it as a I'm sure it exists in many other parts of the region, but it's surprising to me that people that should be in those career opportunities still don't see them as career opportunities.

There's still a gap in awareness of what it is to be an advanced manufacturing and what that could lead to, and that I could get this kind of job without without going to college or maybe with the with an associate's degree or a training program like the county's fast track program, that can put me in with a few weeks of training and and within a couple of years, I might be making 35 or $40 an hour if I if I work hard.

And I don't know that people are even aware, they don't see themselves in that, in that space, it's as far away as saying you could be an astronaut.

How do you think the average San Antonio benefits from this dynamic we're describing here?

Well, I mean, this is this is who we are.

You know, for years we aspire to be, you know, like Austin or like another one of the cities that are really find their moment in Nashville, Denver, the research triangle over the course of de Lanta had their moment, and we aspired that for ourselves.

But I think we we tend to not take into account who we actually are today.

I think we have this moment, as you mentioned.

I mean, when I first began economic development, the constant refrain was everything goes to the north side.

Nothing comes to the south side.

Nobody's saying that anymore.

If you've driven around South Bexar County, it's it's unbelievable.

The rooftops, the prosperity, the investment, the economic activity.

In San Antonio.

All the way to the county line.

The benefit is to to give ourselves another economic engine that fits who we are today.

That is aspirational.

Because this this isn't just about putting trucks together.

I mean, we have the Toyota National headquarters in Plano.

We have, you know, Tesla's headquarters in Austin.

We we have the chance for the moving up that that supply chain into those headquarters and jobs as well.

I hope thanks to you, that we have explained to our viewers the significance of this opportunity that lies to the South.

And I want to thank you for helping enlighten us with you from your experience.

Thank you very much.

Thank you for being with us as we learn and discover the impact of this historical growth we're experiencing in San Antonio and throughout the region.

We will keep exploring these topics here on class for Business of Business.

I'm Henry Cisneros.

This program is supported by Texas Mutual Workers Compensation Insurance.