REOC San Antonio
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Kim_Gatley
Kim Gatley
S
enior Vice President & Director of Research at REOC San Antonio

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Trade Fuels Growth in Texas

Many metro areas of the Southwest region of the United States are among the fastest growing in the country, and that trend doesn’t seem to be slowing. The region is home to a growing population base, making it ideal for expansion and relocation projects. 

Texas led the nation in population growth during the first decade of the 21st century, according to the 2010 U.S. Census. Other states to have large population gains include Arizona, Nevada, and Utah.

…NAFTA helps boost San Antonio

The North American Free Trade Agreement (NAFTA) has perhaps had no greater impact on a U.S. metro area than it has on San Antonio. Of course, location is a major reason. San Antonio is located near the U.S.-Mexican border, making it a natural gateway for imports and exports.

“We consistently see U.S. and international companies come to San Antonio to do business in Mexico,” says Mario Hernandez, president of the San Antonio Economic Development Foundation. “We have companies locating here each year that have direct ties to Mexico. This is directly a result of NAFTA and the increasing trade between the two countries.

“We have always tried to look south to Mexico for opportunities,” he adds. “It has been a focal point for us.”

In many instances, companies that manufacture product in Mexico have established warehouse and distribution operations in San Antonio for shipping to the United States. Hernandez cites several examples, including R.G. Barry Corp., which manufactures Dearfoams Slippers in Mexico and uses San Antonio as its U.S. distribution gateway. Another example is Caterpillar, which manufactures diesel engine blocks in Monterrey, Mexico, then ships them to San Antonio, where they are finished and distributed.

Going the other way, numerous Japanese automobile suppliers have located in San Antonio, not only to supply Toyota’s plant in the metro area, but also to supply automobile manufacturing plants in Mexico. And when Microsoft was looking to build a new data center, it did so in San Antonio as way to stay connected with potential business in Mexico and South America.

“These types of expansions have really accelerated since NAFTA,” Hernandez says.

To ensure that transportation remains smooth, there have been numerous improvements in the metro area’s logistics infrastructure with considerable funding for rail- and highway-related projects. When Kelly Air Force Base shut down in the mid 1990s, the community responded by converting it into a city-owned industrial park—Port San Antonio—that today emphasizes the transportation and logistics industry with a focus on Mexico, Hernandez says. The park has more than 2,000 acres, which includes warehouse and distribution facilities.

San Antonio is also at the crossroads of Interstates 10 and 35, which gives manufacturers coming over the border immediate access north to Canada and to both the east and west coasts.

“Most goods are still shipped by truck, and the highway system is very important to us,” says Hernandez, adding that San Antonio has more freeway miles than just about any other city in the U.S., except Los Angeles. “The continued investment in highway infrastructure from federal, state, and local governments continues.”

There is also direct access to the ports in Houston and Corpus Christi.

San Antonio continues to try to parlay its success with NAFTA into additional business opportunities. Hernandez says local officials are trying to establish relationships with seaports on Mexico’s western coast in an effort to provide an alternative route for companies with manufacturing operations in China to ship their product to the U.S. After being unloaded at a Mexican port, product would be shipped via rail to San Antonio and distributed nationwide. “We can save [manufacturers] a tremendous amount of time and money,” Hernandez emphasizes. 

Read the full article Trade Fuels Growth in Texas (World Trade magazine, April 2, 2011) which highlights additional growth areas in Texas.

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