Strengthening San Antonio’s claim as a new hub for automotive manufacturing, Navistar’s long-awaited truck factory will celebrate its grand opening on Wednesday, though production at the site has been underway for months.

The nearly 1 million-square-foot facility, set to ultimately employ around 620 people, manufactures heavy-duty trucks powered by diesel or electric engines, and could one day also produce hydrogen-powered trucks.

The plant is designed to produce 50 trucks a day with a single shift of workers, but the facility is not up to that capacity yet.

“There’s not a big flip-the-switch moment,” said Rod Spencer, director of Navistar’s San Antonio production facility. “Even turning on water or power to a site like this is a fairly complicated process.”

And its current workforce is still being trained and testing out new equipment. “We’ve got about 500 new people that I expect to build a truck, and they’ve never built a truck before,” Spencer said.

The first truck — an electric medium-duty model — came off the line in late January.

Spencer said the plant was the brainchild of his boss, Navistar’s head of manufacturing Mark Hernandez, who envisioned a benchmark facility using the latest advances in technology. “It’s pretty exciting to be a part of that,” Spencer said.

Navistar, known for its international line of trucks, was bought by Volkswagen subsidiary the Traton Group last year for $3.7 billion.

The local manufacturing facility has had no difficulties finding labor, Spencer said, and Navistar officials are processing applicants to fill the last 120 or so open positions remaining. The only job they’ve had trouble finding applicants for is experienced maintenance technicians.

Manufacturing is one of San Antonio’s largest industries, with a reported $40.5 billion economic impact from 2016 alone, according to the latest industry-wide report from the San Antonio Manufacturers Association. Manufacturing workers make up nearly 6% of the San Antonio metropolitan area’s workforce, according to recent census figures.

An automotive hub

Navistar — which produces commercial trucks, buses, military vehicles, and engines — first announced plans in 2019 for a $250 million facility. Those plans were expanded a little over a year later, when the company announced an additional $25 million investment to include more engineering facilities at a site south of the main facility.

The San Antonio area has become a hub for automotive manufacturers, such as Toyota, Caterpillar, Aisin Corp.’s AW Texas, and a myriad of other suppliers.

Robots weld together truck cabs at Navistar’s new truck factory on Wednesday.
Robots weld together truck cabs at Navistar’s new truck factory on Wednesday. Credit: Nick Wagner / San Antonio Report

Its decision to expand its plans was spurred by local and state leaders having created a “business climate that supports manufacturing innovation and has attracted a talented workforce,” Navistar President and CEO Persio Lisboa said in a statement at the time.

City and county officials have given a combined $14.4 million in tax relief for the project. More incentives have come from the state, which approved the project as a Texas Enterprise Zone at the highest designation, allowing it to claim up to $3.75 million in refunds for sales and use taxes.

Wednesday’s grand opening event will give local and state officials a chance to tour the facility and see workers building trucks on the line.

Pitching the city

Navistar’s entrance to San Antonio was guided in part by San Antonio’s economic development foundation. The organization, which recruits companies to San Antonio and recently rebranded as Greater:SATX, helped pitch the city when the manufacturer was looking for a site.

“We didn’t know who the company was for some time,” said Jenna Saucedo-Herrera, president and CEO of the organization. “All we knew was the land requirements, power requirements, the number of jobs, and so on.”

In early 2019, she and others traveled to Lisle, Illinois, the manufacturer’s headquarters, during these talks. They also introduced the company to city, county and state officials.

Greater:SATX announced Navistar’s plans the same week it revealed that Toyota had decided to expand its operations and that AW Texas, which manufactures transmissions for Toyota, would be building a $400 million plant in Cibolo.

The tendency of suppliers to move closer to final-stage manufacturers, and the pull those suppliers have on other manufacturers, is what Saucedo-Herrera calls the “multiplier effect,” and it’s why manufacturing is a target industry of Greater:SATX, she said.

A Navistar employee is seen through a row of window openings on truck cabin doors at Navistar’s new truck factory on Wednesday.
A Navistar employee is seen through a row of window openings of truck doors at Navistar’s new truck factory on Wednesday. Credit: Nick Wagner / San Antonio Report

She said her organization is already in talks with some Navistar suppliers. Suppliers for Tesla, which recently built a factory outside Austin, also are interested in the San Antonio area. One such Tesla supplier, Matthews International, already landed in San Antonio last year with the help of economic incentives from the city.

Last month, DeLorean Motor Co. announced it was planning a new corporate headquarters for its reconstituted electric car company at Port San Antonio.

Proximity to northern Mexico’s automotive suppliers is part of San Antonio’s position as an emerging hub. Navistar, for example, will be sourcing parts from Monterrey, Spencer said.

Close supply chains have become especially important recently, as persistent delays have snarled production lines across the country for close to a year now.

A survey last month of Texas manufacturers from the Dallas Federal Reserve Bank showed that about two-thirds of manufacturers continue to have supply-chain disruptions — including more than 90% of those that depend on international suppliers.

Waylon Cunningham

Waylon Cunningham writes about business and technology. Contact him at waylon@sareport.org.