With tech assets, can Austin become key player in automotive industry?

ByLaylan Copelin


Updated: 11:03 a.m. Sunday, March 11, 2012

Published: 8:59 p.m. Saturday, March 10, 2012

Austin officials – and Texas leaders, for that matter – are getting a touch of  car fever.

Not the desire to buy the latest models, but to help build them — or create  the next generation of high-tech vehicles.

A rebounding automotive industry has Texas lawmakers clearing the way for the  next competition for an assembly plant and Greater Austin Chamber of  Commerce officials intensifying their efforts to play a larger role in the  global automotive industry, especially as technology changes how consumers  think about vehicles.

“Cars are changing; the industry is changing,” said Adrianna Cruz,  vice president of global corporate recruitment at Opportunity Austin, the  chamber’s economic development arm.

“Even though traditional manufacturing is something we’re going to target,”  Cruz said, “Austin could also play a huge role as cars become smarter,  cleaner and safer.”

Cruz said Austin can leverage its technology base, the University of Texas’  research muscle and the city’s lifestyle to capture at least a piece of the  auto industry.

It doesn’t hurt that Texas already has a strong foothold in auto manufacturing  with plants in Arlington and San Antonio, easy access to Mexico’s  manufacturing base, and state leaders interested in expanding Texas’ role in  vehicle manufacturing.

Texas House Speaker Joe Straus — who hails from San Antonio, which landed  Toyota’s truck assembly plant in 2003 — has ordered lawmakers to be sure  Texas has no impediments to competing for future opportunities.

He said he took that step after a group of industry representatives, including  former state senator and General Motors executive John Montford, met with  him last summer.

Those ambitions lead to the question: Could Austin — or Texas — become the  next Detroit?

“The next Detroit? That’s pretty grandiose thinking,” said Kim Hill  with the Center for Automotive Research in Ann Arbor, Mich.

Even in the wake of competition from Southern auto plants, recession,  bankruptcy and bailouts, almost half of the nation’s automotive jobs remain  in Michigan, Indiana and Ohio, according to the Bureau of Labor Statistics.

Eleven of the 12 automakers, including the Big Three’s foreign competitors,  have major research and development centers in Michigan.

Many of the industry’s parts suppliers also have their corporate headquarters  in the Midwest.

“Much like Hollywood is to the film industry, Detroit will probably  always lead the nation’s auto industry,” said Greg Burkart, managing  director of the Detroit office of Duff & Phelps, an investment banking  firm that works closely with the automotive industry.

Connections to industry

That’s not to say Hill and Burkart don’t see Austin’s and Texas’ potential as  an automotive industry center.

“Attracting an assembly plant is a once-in-a-lifetime event,” Hill  said. “But the technology end is going to only get bigger and bigger.”

Burkart said “innovation clusters” such as Austin, Raleigh-Durham,  N.C., and Silicon Valley in California could develop their own highly  advanced automotive industries.

“And because many of these regions are highly desirable places to live  and work, Detroit, Germany, Japan and Korea may be forced to ‘come to them’  to remain competitive,” he said.

Vehicle sales in the U.S. shrank dramatically during the recession, from a  production high of 17 million vehicles in 2007 to a low of about 10 million  a couple of years later.

Several plants were shuttered in response, but this year vehicle sales are  projected to reach about 14 million, as auto executives wring as much as  they can from existing plants.

Expansion — at least for some manufacturers — is on the horizon. Foreign  production, in particular, might be shifted to the U.S. because of rising  sales and a weak dollar.

Hyundai’s popularity is straining the capacity of its Alabama and Georgia  plants, Hill said, and Audi is weighing opening a North American facility.

Honda and Toyota, once they’ve recovered, might expand operations in the  United States, Hill said.

Texas already has a large role in vehicle manufacturing. In 2010, the state  ranked sixth nationally for automotive manufacturing employment, according  to the Bureau of Labor Statistics, with plants building everything from cars  to trucks to military vehicles.