(The following story by David Hendricks was published in the January 9 issue of the San Antonio Express-News.)
SAN ANTONIO, Texas — Fort Worth-based Burlington Northern Santa Fe Railroad is boosting San Antonio’s hopes of landing a Toyota Motor Corp. truck assembly plant with a multimillion-dollar commitment despite extolling the virtues of the other leading contender for the plant, Marion, Ark.
Economic Development Foundation President Mario Hernandez said he couldn’t reveal the amount of Burlington Northern’s commitment, but said it would help add rail competition for the prospective South Bexar County site.
The factory is expected to generate an annual payroll of $265 million, and eventually could mean as many as 22,000 new jobs for the area.
San Antonio officials expect a decision on the plant site sometime between February and the end of March.
“It is multimillions of dollars, and it is contingent on Burlington Northern getting some of Toyota’s (freight) business,” Hernandez said. “It shows a commitment.”
Burlington Northern’s contribution adds to the $15 million Gov. Rick Perry pledged in mid-December his office will put toward a $22 million rail track spur, connecting the South Bexar County site preferred by Toyota to the nearest Burlington Northern tracks.
The money could be used to help build the rail spur or to reduce freight rates charged to Toyota.
“That has not been allocated,” Hernandez said. “We hope some of it can be used to offset construction costs” of the rail spur.
Only Omaha, Neb.-based Union Pacific, which owns a north-south track near the site at the unbuilt Applewhite reservoir, presently serves the site.
Union Pacific, however, isn’t negotiating with Burlington Northern or Toyota for use of that track, Hernandez said.
“Once Toyota found that out, it asked us to create the rail district. We did that immediately,” Bexar County Judge Nelson Wolff recalled, addressing a San Antonio Transportation Association luncheon Wednesday.
“We have the cost figures for five possible routes,” Wolff said. “We built in a 20 percent contingency fund into the cost figures and funds for right of way.”
The rail district can buy land and finance construction of the rail spur needed to meet Toyota’s rail competition requirement, and has set aside $4 million for land acquisition.
“But I don’t think it will take that much,” Wolff said. “Landowners should see the benefit of being alongside a rail line. We think some of it would be donated. I think Toyota is convinced that we have the financing and the ability to build this.”
“Toyota is very confident we can get this done,” Hernandez added. “The rapid response of the county and getting the state commitments makes it real.”
But Texas-based Burlington Northern also sent a letter to Toyota saying the Marion, Ark., site where Burlington Northern and Union Pacific both have tracks already has better infrastructure in place.
“But, to Burlington Northern’s credit, it has been cooperative with us, much more than Union Pacific,” Hernandez said. “Burlington Northern helped define the five (rail spur) routes for us.”
The incentive packages from Texas and Arkansas are complete, Hernandez and Wolff said.
“It’s strictly a business decision now,” Wolff said. “Toyota has to weigh what Arkansas is offering against the Texas offer. I think we have better than a 50-50 chance.”
Wolff said he believes Toyota will decide where to build the plant within 30 to 60 days. Hernandez said the decision will come by the end of the first quarter of 2003.
The plant would directly employ about 2,000 workers by the end of its first phase and 4,000 by the end of the second, Wolff said.Hernandez confirmed that, but said the timetable for two phases is flexible and uncertain.
The assembly plant is expected to start operations in 2005 or 2006.The ripple effect for this area is expected to be 5.5 new jobs for each Toyota job.The Toyota decision therefore means 22,000 new jobs for Bexar County if the plant is built here, after the suppliers arrive and the high-paying incomes filter through the economy to create retail, service and even additional manufacturing jobs.
“We are looking for at least 10 vendors that would be following Toyota here,” Wolff said.
The main suppliers would need to supply auto components within 30 minutes notice. Others would have longer timelines but would need to be near the plant.Wolff said that if the Toyota factory were in existence now, Marion, Ark., would be the best site because of the existing roads and rail tracks and its proximity to other Toyota plants.
“But the future is here,” Wolff stressed. “It’s not in Arkansas.”Toyota is building more North American plants because the Japanese population is set to begin declining in 2007, while the U.S. population will grow to 400 million by 2030.Toyota also believes the Hispanic market is the fastest growing, Wolff said, and that it can sell 100,000 more vehicles each passing year to Hispanics.
“San Antonio is representative of where Texas and the Southwest states are headed,” Hernandez said. “Also, Toyota would hire a lot of Hispanic employees. If autos are built in a market, it sells better in that market. That’s been proven.”
Wednesday, Hernandez and Wolff met with Port of Corpus Christi officials to learn about the port’s long-range plans to expand — especially in the area of container facilities that could handle the world’s largest container ships.Wolff and Hernandez gave port officials contacts at Toyota so the automotive giant can better understand its freight options.
Toyota already is building an Alabama engine plant that could use the ports of Houston and Corpus Christi to reach a San Antonio Toyota factory.
Also, last fall’s strike of West Coast longshoremen indicates Toyota should have other options for shipping components to North American factories, Hernandez added.Texas is doing everything it can to get the Toyota plant, Wolff said, because the state knows it has not done enough to attract manufacturing to the state and because it wants Toyota to lead to more auto manufacturing in Texas.
“In my 30 years in government, this is by far the most intensive cooperation between Republicans and Democrats, local and state officials,” Wolff said. “The crown jewels of economic development are the vehicle manufacturing companies.”