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Borderlands: Manufacturing sector in Austin is booming

Tesla’s $1 billion gigafactory in Austin, Texas, will begin producing the company’s Model Y electric vehicle by early next year. Pictured is the plant in September while still under construction. (Photo: Tesla)

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: manufacturing sector in Austin, Texas, is booming; GDP from freight transport in Mexico fell last year; reverse logistics firm opening Fort Worth facility; and CBP finds massive load of drugs in auto parts shipment.

Texas capital has range of factories incoming

With new factories slated from tech giants such as Samsung and Tesla, along with a dozen or so announced facilities from other companies in the pipeline, manufacturing in Austin, Texas, is booming.

While Austin has had a strong manufacturing base for decades, the past 17 months have seen a string of victories for the area, most recently Continental AG, Plastikon Industries, Simwon, CelLink, Viking Supplynet, American HVAC Metal Supply Inc. and Lanter Delivery Systems.

Ed Latson, founder and CEO of the Austin Regional Manufacturers Association (ARMA), said the region’s unique workforce is one of the main things attracting new factories.

“I think what’s unique about Austin compared to the rest of Texas is our advanced manufacturing workforce,” Latson told FreightWaves. “There’s a lot of electronics and instrumentation and semiconductors being built here, which has really created a dynamic workforce that is appealing to a lot of these advanced factories that are coming in, like Tesla.”

Latson founded ARMA in 2013 as a trade association focused on strengthening the Central Texas manufacturing community through advocacy, workforce development and networking.

ARMA members include some of the largest employers in the Austin area like Samsung, Applied Materials, NXP, ICU Medical and National Instruments, as well as 250 small and medium size companies from sectors such as food and beverage, bio/pharmaceuticals, automotive, printing and metal fabrication.

“There’s about 1,800 manufacturers in the Austin [metro region],” Latson said. “It’s a very high tech community. About 50% of it is computer and electronics products. We also have a really strong bio/pharmaceutical and medical device manufacturing cluster as well.”

When Latson started ARMA nine years ago, Austin already had a strong manufacturing presence, he said.

“There were already strong players here,” Latson said. “There was already about $12 billion in annual output being produced by area manufacturing companies. That output has grown to about $14.5 billion annually.”

FreightWaves SONAR platform includes the outbound tender market share index that measures the relative percentage of outbound tender volumes in each market in the U.S., adding up to 100. The Austin market accounted for .36% of the total outbound truckload demand recently and is up significantly compared to previous years.

To learn more about FreightWaves SONAR, click here.

Austin’s manufacturing output is expected to grow significantly when Tesla’s (NASDAQ: TSLA) $1 billion gigafactory begins production by early next year.

Another recent win for Austin was Samsung’s announcement it would build a $17 billion semiconductor chip plant in Taylor, Texas, about 29 miles northeast of the city. The facility is scheduled to open by the end of 2024.

Latson said Samsung’s new factory in Taylor highlights the United States reassessment of its supply chain.

“We’ve been exposed in this country for not having enough domestic resources to make chips,” Latson. “There’s a lot of interest in having more domestic presence in manufacturing, as well as shortening supply chains, looking for local and regional suppliers that you can have personal relationships with.”

GDP from transport in Mexico fell sharply last year

Gross domestic product (GDP) from freight transport in Mexico fell 10.1% year-over-year in 2020, according to an annual report titled “Knowing the freight transport industry” from the Mexican government.

The overall national GDP fell 8.2% in 2020, dragged down by the effects of COVID-19 on factories and other economic activities, the report said. 

Freight transport still contributed 3.3% of GDP to the Mexican economy last year. The trucking sector recovered quickly when the economy reopened in June, boosted by freight from the automotive, mining and construction industries.

Employment in Mexico’s trucking industry fell 1.5% year-over-year in 2020 to about 982,000 jobs, with the disruption caused by the pandemic subtracting about 15,000 jobs. 

Reverse logistics firm opening Fort Worth facility

goTRG, which works with manufacturers and retailers to manage logistics for returned goods, is set to open a 250,000-square-foot facility in Fort Worth, Texas.

The Miami, Florida-based company operates 15 facilities across six states, as well as a facility in Canada. The facility in Fort Worth, which will create 200 jobs, is goTRG’s first facility in Texas.

“We are thrilled to open our next reverse logistics center in the Dallas area, where there is significant workforce talent and easy access for transporting products,” CEO and founder Sender Shamiss said in a statement.

CBP finds massive load of drugs in auto parts load 

U.S. Customs and Border Protection officers at the Port of Nogales, Arizona, discovered a record amount of methamphetamine Wednesday, according to a release.

Officers at the Mariposa commercial port of entry seized 3,280 pounds of meth hidden inside a shipment of auto parts from Mexico while inspecting a tractor trailer.

Officers seized the drugs and vehicle, while the truck driver was arrested and turned over to Homeland Security Investigations.

Click for more FreightWaves articles by Noi Mahoney.

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Noi Mahoney

Noi Mahoney is a Texas-based journalist who covers cross-border trade, logistics and supply chains for FreightWaves. He graduated from the University of Texas at Austin with a degree in English in 1998. Mahoney has more than 20 years experience as a journalist, working for newspapers in Florida, Maryland and Texas. Contact [email protected]