Courtesy / Toyota Motor Manufacturing Texas
Toyota has selected San Antonio over its nine other U.S. plants for a $391 million expansion that will bring advanced manufacturing capabilities to its assembly plant and more supplier companies to the region over the next five years, company officials said Tuesday.
Kevin Voelkel, senior vice president of Toyota Motor Manufacturing Texas, made the announcement at a news conference with Toyota officials, local officials, and Gov. Greg Abbott at the plant’s visitor center Tuesday afternoon.
“Today is about Toyota and Texas, it is a great day for Toyota, it is a great day for the great state of Texas,” Abbott said. “I always feel so much pride when I see the decals on Tundras – born in Texas, built by Texans. There is no label more powerful than ‘made in Texas,’ and you helped make that true.”
Toyota plans to invest heavily in its truck assembly plant on San Antonio’s South Side, established 16 years ago at a cost of $2.1 billion to build its line of full-size Tundra trucks. In 2010, Toyota put another $100 million into the plant to support production of the mid-size Tacoma.
Toyota plans to upgrade its manufacturing technologies within the plant, and the footprint may expand in some areas as a result. But a Toyota spokeswoman said she could not comment on whether the automaker would be adding production capabilities for another vehicle model in addition to the Tundra and Tacoma.
Though no timeline for its latest investment was provided, Toyota estimated its total investment in the plant will exceed $3 billion when complete. Mayor Ron Nirenberg called it a game-changer for San Antonio that began in 1987 when the city established a Sister City relationship with Kumamoto, Japan, under then-Mayor Henry Cisneros’ leadership.
“This is exactly the kind of project San Antonio has been strategically preparing for, and it shows we are ready for big investment and that our workforce is dialed in for the future,” Nirenberg said.
“We’ve been working across sectors to establish one of the most significant international manufacturing clusters in the country and a supplier network that really is second to none in the automotive industry, and the news today is proof-positive of that.”
The expansion announcement comes as part of a broader commitment from Toyota to invest $13 billion in its U.S. operations over five years.
In an exclusive interview with the Rivard Report on Monday, Marjorie Schussel, general manager of corporate communications for Toyota Motor North America, said the choice to invest in San Antonio demonstrates that the company is here to stay.
“This investment will be able to provide us the ability to be ready for whatever the future has to bring for our facility,” said Luisa Casso, corporate communications manager for Toyota Motor Manufacturing Texas (TMMTX). For now, the plant is afocused on the Tundra and Tacoma.
Even with the upgrades in technology, the company does not plan to add any new jobs, Casso said. However, a large number of indirect jobs through its suppliers are expected. Toyota directly employs 3,200 people, and with its 23 local suppliers, there are approximately 7,200 total at the project site.
Toyota promised further investments beyond the $391 million in exchange for incentive packages that were offered this summer by both the City of San Antonio and Bexar County intended to sweeten the deal with Toyota.
The City approved a $9.7 million incentive package in May that included a tax abatement of 100 percent of Toyota’s new property taxes for the next eight years and a Chapter 380 Economic Development Fund grant of up to $621,000 for water infrastructure improvements.
In doing so, City officials said the return on investment to date for the incentives provided to Toyota in past years has netted $25 million in fiscal benefit, according to figures provided by the City’s Economic Development Department. They estimated the cumulative fiscal impact with the latest proposed investment through 2032 would total $83.4 million.
“Toyota, in its history in San Antonio, has been a great partner in community building, and has always overshot its own estimates and has been thoughtful and deliberate in investing in San Antonio to the benefit of the people who work for the company and who reside around it,” Nirenberg said.
In July, county commissioners also gave their OK for a 10-year, 80 percent abatement of County ad valorem taxes on qualified and real property. At the current tax rate, that incentive would save Toyota more than $9 million during the 10 years and net the County just less than $2 million in the same period.
The agreements called for Toyota to spend an estimated $392 million on its plants during the next three years, commit to using CPS Energy and San Antonio Water Systems exclusively for 14 years, and contribute $1 million to local education and workforce development initiatives during the next five years.
Toyota also agreed to retain its current employees and pay new and existing employees the City-mandated living wage of $12.38 per hour, and 70 percent of all new and existing employees the prevailing “all-industry” wage of at least $16.94 hourly.
Widely seen as a predictor of Tuesday’s announcement, in July, Guadalupe County commissioners and the Cibolo City Council also approved an economic incentive package for a major Toyota supplier looking to establish a $400 million plant and bring 900 jobs to the region. That supplier, Aisin AW, stated Tuesday the plant will manufacture automatic transmissions.
The 900 jobs Aisin AW plans to bring to the region are among the 40,000 total jobs and $10 billion in economic impact that Toyota’s investments will bring to San Antonio over the next 10 years, according to a study commissioned by SAEDF.
In January 2018, City officials watched a similar opportunity elude them when Toyota chose Alabama over San Antonio for its combined mega-plant with Mazda. Then came a new opportunity.
“We were never going to stop with the continued commitment with Toyota to see what other opportunities we have with Toyota,” said Councilwoman Rebecca Viagran (D3), whose district is home to TMMTX and who chairs the City’s Economic Development and Workforce Committee and co-chairs the
San Antonio Economic Development Foundation (SAEDF) International Advisory Council.
Toyota has a global workforce of 364,445 and operates manufacturing plants and research and development sites throughout North America. The San Antonio plant and its suppliers rely on a dynamic product supply chain that includes Mexico.
Manufacturing has a $40.5 billion annual economic impact on San Antonio, according to data provided by the SAEDF, and accounts for 29 percent of the workforce. It is one of its four targeted industries for growth in the coming years.
“[Toyota] believed in us because of the long ties we had with them,” Bexar County Judge Nelson Wolff said. “They believed that the North American Free Trade Agreement … that brought the three countries together and created an economic giant … they understood us and they knew Texas bought a lot of pickups.”
Earlier in September, SAEDF President and CEO Jenna Saucedo-Herrera said her organization is working with regional partners specifically on attracting and retaining manufacturing employers because of the size and scale of what those opportunities represent. By the end of the year, she said the foundation will have announced more than 1,000 new manufacturing jobs and about a billion dollars in capital investment coming to San Antonio.
“We’ve been talking a lot about our regional economic development strategy here in San Antonio,” Saucedo-Herrera said. “So not just within San Antonio and our service territory, but partnering with folks like Cibolo and Schertz and so many others. This decision [by Toyota] just kind of catapulted us into that regional strategy directly just with that one announcement.”
As a manufacturer, Toyota views itself these days not as an automobile company, Casso said, but as a mobility company. That’s why it contributes $1.5 million annually to workforce development and education in San Antonio.
“We’re in the process of that transformation and we see that mobility is also about social and economic mobility, and education is a vehicle to social and economic growth,” she said.
Voelkel also announced that Toyota will donate $500,000 to the Alamo Promise program over a five-year period. Alamo Promise is a last-dollar scholarship program that will provide free community college tuition to low-income seniors graduating from Bexar County high schools.
When Alamo Colleges Chancellor Mike Flores introduced the program in January, he estimated the program could cost between $2 million and $15 million per year, depending on how many students take advantage when the first cohort enrolls in fall 2020.
Alamo Promise addresses one of San Antonio’s biggest challenges in marketing itself to companies looking to move here. Poor educational attainment, Saucedo-Herrera said, is at the root of the city’s income inequality and workforce challenges.
“We can talk about infrastructure and quality of place, but at end of the day, the ability to educate, develop and empower our own youth for these types of jobs that we’re either looking to recruit or help grow here, that’s what’s going to be the differentiating factor, that’s what’s going to change our value proposition,” Saucedo-Herrera.
The remainder of the $1 million that Toyota agreed to in the incentive agreement will go toward education and workforce-related initiatives in the city. Casso said the company would be making an announcement about that in the next few months.
“You can’t say enough about the fact that Toyota chose us,” Wolff said. “We’re doing everything we can to support their workforce. [And] they are continuing to invest in our workforce and we think that’s by far the most important thing we need to be able to do here in San Antonio.”