Port San Antonio remains one of the largest industrial sites in South Texas. It’s where aerospace giants such as the Boeing Co., Lockheed-Martin and Standard Aero can help lure a variety of like-minded businesses to the former Kelly Air Force Base.
Jim Perschbach, executive vice president of business development at Port San Antonio, believes there’s enough room at the complex – and enough local workforce talent – to further grow the Port as a major aerospace hub. But he’s also not one to hold back on what he thinks is getting in the way of taking that next leap forward.
“We believe, that there’s no problem in San Antonio that can’t be fixed by increasing the average wage and providing more employment,” Perschbach told a ballroom filled with people at the Westin Riverwalk Hotel on Thursday. He spoke during the first of a three-part aerospace industry luncheon series, “Soaring to New Heights?,” offered by the San Antonio Chamber of Commerce. Download his presentation here.
Perschbach cited the many assets that Port San Antonio has, and why San Antonio – a city long steeped in aviation and military history – continues to be a model community for the aerospace industry. He said the career field, as a whole, offers good pay and growth potential, promotes educational attainment and career self-sufficiency, and long-term sustainability.
Money talks, Perschbach said, so the Port and local aerospace ventures should do what they can to offer significant cash and infrastructure incentives to keep existing ventures in San Antonio and to lure new ones to town.
“But these incentives should be targeted to attract employers who pay well, attract other employers and who are in it for the long haul,” he added. This is where the concern over wages really kicks in. Perschbach said San Antonio, for the most part, has a reputation for being a low-cost place to do business. That supposed positive for some employers becomes a negative for others, who may perceive a city with an inexpensive labor force as simply not worth entering, he added.
“The biggest mistake this city is making is that we tell ourselves and others we’re a low-cost place to do business. We’re not,” Perschbach said.
Port San Antonio President and CEO Roland Mower made an analogy to echo his point: “There are three ways to compete in this world. You could compete the way Wal-Mart does by stacking them deep and selling them cheap. Or you could compete the way Neiman Marcus or Saks Fifth Avenue does it, where you brag about your quality and you brag about your expense. But the true way to be successful is to be a Dillard’s or a Macy’s, where you provide high quality at a reasonable, affordable price.”
In San Antonio, basic costs associated with construction or operation of a big industrial complex are rather average compared with other big cities, Perschbach said. He urged the city and its aerospace businesses to promote their ability to do “cutting-edge work” with an eager, highly skilled workforce. He said raising average wages in this and other local industries will lead to more things such as direct flights in and out of San Antonio, office buildings, and amenities for Millennials who want to work and live downtown.
But it’s not always easy to attract larger aerospace businesses, he said. That’s why construction costs, a developed workforce, and the power of incumbency (Boeing, Lockheed-Martin, Standard Aero) are the keys to long-term sustainability. Primary tenants are able to lure vendors, suppliers and support ventures, which help cut the Port’s secondary logistics costs and risks long-term.
Perschbach said he and his colleagues are grateful that existing infrastructure at the port is built to support aerospace, but it is getting older and is not always state-of-the-art.
The problem of a lack of adequate facilities or vacant space for an existing or potential tenant arose earlier this year when GDC Technics, based at the port, opted to start leasing 840,000 sq. ft. in the former American Airlines maintenance hangar at Alliance Airport in Fort Worth, Texas, instead of building a new $100 million hangar and support facility at the Port as originally considered.
GDC officials said they could not make the financing of such a new building at Port San Antonio work to their advantage. As a result, GDC is laying off a small number of employees in San Antonio this summer while other workers are accepting a transfer to Fort Worth. In a previous Rivard Report article, Perschbach said GDC, like any other business, considered a construction cost challenge that was difficult to overcome at Port San Antonio.
(Read more: Two Port San Antonio Tenants Expanding Elsewhere.)
The current workforce and talent pipeline is adequate – but, he said, there is room for local educational facilities such as Hallmark University and Alamo Colleges to help Port tenants and other local aerospace businesses to keep and sharpen San Antonio’s edge where skilled workers are concerned.
While San Antonio’s aerospace industry cluster is strong, thanks first to larger key tenants, there’s a need to bolster and expand that base, including diversification and nose-to-tail capability. The latter, he explained, is that the Port should focus on more than just basic manufacture and maintenance of engines, interiors and airframes.
More tenants and other local aerospace enterprises should offer a wider variety of skills designed to service an entire aviation product, not just parts of it, he said. For example, a company and its clients save money by having one vendor work on an entire aircraft rather than several vendors, some located abroad, perform specific work on different parts of an aircraft.
Perschbach said San Antonio’s aerospace community should pay close attention to regional and global trends while emphasizing their skills, value, and efficiency to attract potential businesses. But keeping up with these trends includes a need for Port tenants and other local aerospace ventures to demonstrate mastery of new technology and closure of capability gaps.
Diversification of the aerospace industry, in terms of jobs, can include those related to product life-cycle management, supplier management, engineering and even cybersecurity – another growing local industry, Perschbach said. Cybersecurity is advancing in San Antonio, thanks to the presence of the 24th Air Force and 25th Air Force at Joint Base San Antonio-Lackland with some related programs at the port. As Perschbach pointed out, in these specific cases, cybersecurity and aerospace are connected and have mutual interests.
With such diversification, the industrial cluster could expand and promote more growth. This, he said, would lead to greater regional efficiency and a reduced risk to businesses and their workforce. It may also help a location to survive if a large business tenant or the military decides to consolidate Port/local assets in the future. All of these commitments help demonstrate to potential tenants that San Antonio is a viable site for relocation.
SA Chamber President and CEO Richard Perez said Perschbach and Port representatives provided food for thought for those who want to take advantage of existing opportunities in the local aerospace industry and overcome challenges.
“We’re a city that creates and does, and does it together,” he added.
*Featured/top image: About 3,000 workers are employed by aerospace businesses at the Port. Photo courtesy Port San Antonio.