Strategic Regional Economic Development The Texas-Mexico Automotive SuperCluster (TMASC) Update

David Marquez, Executive Director Bexar County Economic Development November 13, 2009 The Mexico Group
Developed by Bexar County in Collaboration with TMASC Strategic Partners

Strategic Regional Economic Development TMASC Update

Section I: Recognizing Opportunity

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Section II: Building Upon Regional Assets and Resilience

Section III: Attracting New Investment and Growth

Section IV: Positioning the Region for Future Trends

Section V: TMASC efforts & next steps

A Courtship of Over Two Decades... Toyota Motor Manufacturing, Texas (TMMTX)

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

If we could attract the crown jewel of manufacturing, an automobile manufacturing plant, we would dramatically change our local economy. Judge Nelson W. Wolff

Suppliers to the 2007 Toyota Tundra

Source: Automotive News, July 23, 2007

Changing Geography of Assembly

* Radius centered on 430 mile main transportation corridor from Laredo to A SOURCE: ELM Guide, TIP Strategies, Inc., research

Global Manufacturers

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

NOTE: Shaded region represents the NAFTA Highway. SOURCE: ELM Guide, TIP Strategies, Inc. research

Global Vehicle Assembly Plants

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

9 Global Vehicle Manufacturers Almost 900,000 Units Annually 18,000 OEM Workers
Marcopolo Daimler - Freightliner General Motors Chrysler Navistar - International BAE Systems PACCAR - Peterbilt Toyota Caterpillar

Tier 1 Automotive Suppliers

Over 200 Tier 1 supplier plants Over 133,000 workers Approx. 37 million square feet of facilities 74 Tier 1 suppliers (37%) employ 500 or more workers

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Global Suppliers in the Region

Sourcing by Geography

Predominantly Texas

Predominantly Northeastern Mexico

Predominantly Texas & Northeastern Mexico

SOURCE: ELM Guide, TIP Strategies, Inc., research

Regional Employment Assembly Plants and Suppliers

Approximately 151,000 employees

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Legend
Number of Employees Suppliers Assembly Plants

* Radius centered on 430 mile main transportation corridor from Laredo to Arlington. SOURCE: ELM Guide, TIP Strategies, Inc., research

Strategic Regional Economic Development TMASC Update

Section I: Recognizing Opportunity

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Section II: Building Upon Regional Assets and Resilience

Section III: Attracting New Investment and Growth

Section IV: Positioning the Region for Future Trends

Section V: TMASC efforts & next steps

The NAFTA Economy Volume of Trucks per Day To/From Mexico

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Source: U.S. Department of Transportation, 1998

The NAFTA Economy Daily Truck Crossings, Laredo 1995-2009

Trucks per Day
4,073 4,102
BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

5000
3,846 3,950 3,988

4,162 4,284 4,273 3,637

3750
2,791

3,428

3,705

3,710 3,824

2500
2,047

1250

1995

1997

1999

2001

2003

2005

2007

2009 (July)

Truck crossings in Laredo = 48% of TX Total

Source: U.S. Customs and Border Protection, 2009

Infrastructure Seaports
Manzanillo: 1/3 of Mexico Container Trafc
BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Lzaro Crdenas: Alternative to CA for Pacic Freight

Port of Manzanillo Port of Lzaro Crdenas

Infrastructure Railroad
3 Class I Railroads Serve
Texas

12,000+ Miles of Track in

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Texas

Class I Track in Northeastern

Mexico: Kansas City Southern Mexico and Ferromex

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Infrastructure Multimodal

PORT OF LAREDO

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Research & Development Assets

Labor Flexibility

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

States with Right to Work Laws

Source: National Right to Work Legal Defense Foundation, 2009

Affordable Wages for Automotive Manufacturing

TX Helpers--production workers Laborers and freight, stock, and material movers Team assemblers Production workers Cutting, punching, and press machine setters, operators, and tenders Industrial truck and tractor operators Assemblers and fabricators Structural metal fabricators and tters Inspectors, testers, sorters, samplers, and weighers Computer-controlled machine tool operators Machinists Welders, cutters, solderers, and brazers Painters, transportation equipment Electricians Tool and die makers First-line supervisors/managers of production workers Sales Representatives, Wholesale Industrial Engineers Mechanical Engineers
Texas Avg. Hourly Wage as % of States Avg. Hourly Wage
$9.78

AL
90%

GA
95%

IN
86%

KY
84%

MI
81%

MS
89%

MO
89%

NJ
90%

NC
89%

OH
84%

OK
94%

SC
90%

TN
89%

VA
93%

$10.56

102%

93%

89%

96%

80%

103%

85%

86%

95%

87%

101%

96%

96%

90%

$11.26

72%

91%

74%

80%

82%

95%

88%

90%

89%

82%

94%

77%

76%

90%

$12.12

91%

95%

61%

96%

69%

109%

86%

79%

85%

77%

118%

99%

101%

89%

$12.41

96%

95%

84%

94%

76%

98%

85%

90%

99%

86%

97%

91%

91%

90%

$12.57

93%

94%

82%

93%

71%

100%

91%

80%

94%

85%

96%

91%

92%

91%

$12.84

105%

83%

73%

77%

56%

n/a

61%

87%

79%

69%

115%

106%

96%

85%

$14.28

90%

100%

82%

96%

84%

84%

87%

80%

87%

86%

98%

85%

88%

94%

$15.48

112%

108%

96%

101%

87%

113%

90%

93%

108%

93%

88%

103%

103%

93%

$15.54

113%

97%

98%

99%

91%

113%

106%

81%

98%

94%

102%

95%

100%

97%

$16.43

95%

103%

89%

98%

86%

96%

96%

79%

98%

95%

101%

102%

82%

91%

$17.04

110%

112%

103%

110%

93%

106%

107%

93%

104%

103%

111%

105%

109%

96%

$17.12

102%

93%

95%

80%

77%

102%

82%

89%

91%

91%

112%

96%

73%

76%

$19.24

102%

97%

76%

92%

70%

98%

75%

64%

107%

83%

104%

108%

96%

92%

$20.46

94%

99%

86%

97%

77%

90%

87%

88%

104%

88%

103%

99%

97%

97%

$25.6

106%

108%

100%

108%

90%

116%

105%

90%

107%

102%

108%

100%

113%

99%

$28.18

114%

98%

101%

103%

95%

111%

102%

83%

111%

95%

118%

106%

102%

87%

$38.69

109%

110%

116%

119%

101%

119%

113%

99%

114%

112%

116%

112%

117%

101%

$41.38

111%

117%

125%

126%

109%

133%

118%

102%

123%

127%

121%

115%

119%

97%

Source: Bureau of Labor Statistics Occupational Employment and Wage Estimates, 2009

Strength Amid Recession Unemployment

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

September 2009

May 2009

September 2009

Source: Bureau of Labor Statistics; NYTimes.com; FlowingData.com

Strength Amid Recession Recovery

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Source: Moodys Economy.com; MSNBC.com, June 2009

Strength Amid Recession Resilient Metro Areas

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Source: Brookings Institution MetroMonitor, September 2009

Strength Amid Recession Performance

Milken Institute Best Performing Cities Index 2009 Job Creation Job Stability Wage Growth Technological Innovation 9 out top 20 cities in Texas

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Austin-Round Rock Killeen-Temple-Fort Hood Salt Lake City McAllen-Edinburg-Mission Houston-Sugar Land-Baytown Durham Olympia Huntsville Lafayette Raleigh-Cary San Antonio Fort Worth-Arlington Dallas-Plano-Irving El Paso Wichita Corpus Christi Seattle-Bellevue-Everett Baton Rouge Tulsa Greeley

TX TX UT TX TX NC WA AL LA NC TX TX TX TX KS TX WA LA OK CO

Source: Milken Institute, November 2009

Strength Amid Recession CNBCs Top States for Business 2009

State (Overall)
BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Economy (Rank) 7 1 5 4 14

Transportation 10 1 36 31 34

Tech & Innovation 12 3 11 24 26

Workforce 8 14 12 21 9

1. Virginia 2. Texas 3. Colorado 4. Iowa 5. Utah

Strategic Regional Economic Development TMASC Update

Section I: Recognizing Opportunity

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Section II: Building Upon Regional Assets and Resilience

Section III: Attracting New Investment and Growth

Section IV: Positioning the Region for Future Trends

Section V: TMASC efforts & next steps

Corporate Investment in the Region Select Texas FDI 2009

Caterpillar Inc. in Seguin; $170 million Medtronic in San Antonio; $23 million
BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Tianjin Pipe Company in Corpus Christi; $1 billion; 300-600 new jobs Union Pacic San Antonio Intermodal Facility; $120 million Albany Composites in Boerne; $42 million General Dynamics Advanced Information Systems; $1.9 million L-3 Communications in Waco; $10 million Baker Petrolite in Kilgore; $20 million

Corporate Investment in the Region Select Northeastern Mexico FDI 2009

Hitachi Chemical auto parts manufacturing in Nuevo Leon; US $155 million Sanyo solar panel manufacturing in Nuevo Leon; US $15 million, 600 new jobs
BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Golden Dragon copper pipe manufacturing in Coahuila; US $100 million, 550 jobs Speco Aeolian towers manufacturing in Coahuila; US $30 million Hilti mining & construction tools manufacturing in Tamaulipas; US $40 million, 250 new jobs Whirlpool refrigerator manufacturing in Nuevo Leon; US $55 million, 1,100 new jobs Johnson Controls Industries auto battery manufacturing in Nuevo Leon; US $105 million, 250 jobs
Source: MPBulletins.com, September-October 2009

Continued Investment Toyota Moves Future Tacoma Production to San Antonio

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Preserves and stabilizes existing regional suppliers New direct investment - $100 million New direct jobs created - 850 Job multiplier - 1:5 (including suppliers)

Continued Investment Chrysler to Produce Fiat 500 Subcompact in Mexico

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Chrysler likely to expand Toluca plant for production of 100,000 units Target market: new-car shopper, 20-35 age bracket W. Hemisphere market access: plans to sell 75% in NAFTA, 25% in S. America

Continued Investment Ford to Produce Fiesta Hatchback in Cuautitln

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Ford re-tooling Cuautitln assembly plant formerly producing F-Series pickups Production to begin in early 2010 $3 billion investment by Ford and suppliers 4,500 Ford jobs Guanajuato transmission plant, expansion of engine plant in Chihuahua planned

Strategic Regional Economic Development TMASC Update

Section I: Recognizing Opportunity

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Section II: Building Upon Regional Assets and Resilience

Section III: Attracting New Investment and Growth

Section IV: Positioning the Region for Future Trends

Section V: TMASC efforts & next steps

Younger Population Vs. Other OEM States

Median Age July 08 NJ 38.7 OH MI KY TN
BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Median Age 2030 (est.) SC 41.3 MS AL NJ OH MI KY MO U.S.A. TN OK VA IL IN NC Mexico GA TX 41.1 41.0 40.8 40.2 40.2 40.0 39.6 38.7 38.3 37.9 37.8 37.8 37.7 36.8 36.2 35.6 34.6

38.1 38 37.7 37.7 37.6 37.5 37.5 37.1 36.9 36.8 36.7 36.1 36 35.3 34.9 33.2 27.6

SC MO AL VA NC U.S.A. IN OK IL MS GA TX Mexico

Source: Population Division of the Department of Economic and Social Affairs of the UN Secretariat, World Population Prospects: The 2008 Revision, http://esa.un.org/unpp

Population Growth in Mexico

Mexican State
BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

2005 Population Aged 0-14 1,181,971 880,440 764,458 805,289

2005 Population Aged 15-59 2,600,253 1,813,632 1,495,796 1,360,302

Nuevo Len

Tamaulipas Coahuila San Luis Potos

Source: INEGI Conteo de Poblacion y Vivienda 2005

Growth in Driving Age Population (16-85)

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Source: IHS Global Insight, 2009

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

First Time Buyers New Consumers, New Expectations

The Rise of the Hybrid & Electric Car

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Prius and Civic Hybrid among best-selling hybrids Escape & Highlander lead hybrid SUV sales GM began producing hybrid Tahoe, Yukon, Escalade in Arlington, Texas Rise of Microcar Sales

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Safety Features and R&D Potential

Asian Interest

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

China and India OEMs in the US market a reality Potential FDI for TMASC Automotive News Oct 2009 Chinese seen as buyers of U.S. suppliers

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Auto Industry Growth in Asia

Source: Marklines, 2009

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

North American Output

Source: CSM Worldwide, 2009

North American Emerging Manufacturers

Tesla V-Vehicle Magna Fisker Wheego

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Strategic Regional Economic Development TMASC Update

Section I: Recognizing Opportunity

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Section II: Building Upon Regional Assets and Resilience

Section III: Attracting New Investment and Growth

Section IV: Positioning the Region for Future Trends

Section V: TMASC efforts & next steps

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Preserve & grow existing industry

Recruit foreign direct investment

Spur innovation in new technology

Develop a nextgeneration workforce

www.txmxautomotive.com

twitter.com/tmasc

LinkedIn TMASC Group

Regional Collaboration

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Support BAE FMTV production in Sealy, Texas Partners: Sealy EDC, Katy EDC, Greater Houston Partnership

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

Strategic Relationships

Preparation for Robust Growth and Development

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

State survey to identify target zones for automotive manufacturing Launch results in Spring 2010 Strong tool to meet regional development goals

Visit www.txmxautomotive.com for more information

BEXAR COUNTY ECONOMIC DEVELOPMENT, STRATEGIC INITIATIVES

David Marquez Executive Director Bexar County Economic Development Department T: (210) 335-0667 dmarquez@bexar.org www.linkedin.com/in/marquezdavid
Special thanks to T.I.P. Strategies and the City of San Antonio